You consider yourself to be a rational consumer. The marginal utility/price ratio of coffee is 12 utils per dollar. If the price of a donut is $0.75, you should only buy the donut if it gives you at least

Question

Quizplus · Accepted Answer

Since the marginal utility/price ratio for coffee is 12 utils per dollar, we can infer that the marginal utility of a dollar spent on coffee is 12 utils. Therefore, to find the minimum utility required for a $0.75 donut, we can use the following equation:
Marginal utility/price ratio = Marginal utility of a dollar spent on coffee / Price of the donut
12 utils/$1 = Marginal utility of $1 / $0.75
Marginal utility of $1 = $0.75 x 12 utils/$1 = 9 utils
Therefore, to justify buying the donut, it should give at least 9 utils of satisfaction, which corresponds to answer choice B.

You Consider Yourself to Be a Rational Consumer