Answer:
These data suggest that Ms. Thomson should buy less of B and more of A.
Explanation: When comparing the marginal utility of two products, it is advised that a consumer should buy more of the product that give them the highest marginal utility per unit money spent on such a product.
What this basically means is this, for a consumer to maximize their utility, they should spend more on products that yield the highest marginal utility per unit money.
Therefore in the scenario given above, we will calculate to see which product yields the highest marginal utility.
For product A, the marginal utility per dollar is 16/2 = 8.
For product B, the marginal utility per dollar is 24/4 = 6.
We can now see that Product A has this higher marginal utility per dollar, and therefore, more of this product should be consumed and less of Product B should be consumed.
Answer:
should buy less B and more A
Explanation:
Suppose that Ms. Thomson is currently exhausting her money income by purchasing 10 units of A and 8 units of B at prices of $2 and $4, respectively. The marginal utility of the last units of A and B are 16 and 24, respectively. These data suggest that Ms. Thomson should buy less B and more A.
