assume that product alpha and product beta are both priced at $1 per unit and that ellie has $20 to spend on alpha and beta. she buys 8 units of alpha and 12 units of beta. the marginal utilities of the last unit of alpha and beta that she purchases are 40 utils and 20 utils, respectively. this indicates that

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27-10-2022
Business

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assume that product alpha and product beta are both priced at $1 per unit and that ellie has $20 to spend on alpha and beta. she buys 8 units of alpha and 12 units of beta. the marginal utilities of the last unit of alpha and beta that she purchases are 40 utils and 20 utils, respectively. this indicates that

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baliyansmiriti baliyansmiriti · Answer 1 · 2022-11-01T14:07:39-04:00

In order to maximize utility, Ellie should buy more of Alpha and less of Beta because with the same price of $1, one additional unit of Alpha gives more satisfaction to Ellie buy 40utils than buy getting an additional unit of Beta with 20 utils only.

40/$1 = 40.

whereas 20/$1= 20.

Marginal utilities are the brought pleasure a customer receives from having one greater unit of an excellent or service. The idea of marginal software is utilized by economists to decide how a lot of an object clients are inclined to purchase. The regulation of diminishing marginal software is frequently used to justify innovative taxes.

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