The price of a video is $3 and the price of a dinner is $9. From this we know th

Question

The price of a video is $3 and the price of a dinner is $9. From this we know that a consumer who is maximizing utility will a. Buy enough of the two goods such that the marginal utility from the last dinner consumed is three times greater than the marginal utility from the last video. b. Buy three times as many dinners as videos. c. Buy rnough of the two goods such that the marginal utility from the last vide is three times greater than the marginal utility from the last dinner consumed. d. Buy three times as many videos as dinners.

Explanation / Answer

The price of a video is $3 and the price of a dinner is $9.

Price of dinner(PD)=9= 3times price of video(PV)=3(3)=9

At optimum consumption bundle,

MUdinner/PD= MUvideo/PV

MUdinner/9= MUvideo/3

For this to happen, Buy enough of the two goods such that the marginal utility from the last video is three times greater than the marginal utility from the last dinner consumed.

Hence correct option is c.

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