Multiple Choice
In making the best economic choices, consumers compare the benefits of the choice to:
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
If the price of an apple is 0.50, what is the marginal utility per dollar spent on the fifth apple if its marginal utility is 1.5?
A
3
B
1.5
C
0.33
D
0.75
Verified step by step guidance1
Identify the given information: the price of an apple is \$0.50\( and the marginal utility (MU) of the fifth apple is \)1.5$ utils.
Recall the formula for marginal utility per dollar spent, which is the marginal utility divided by the price of the good: \(\text{MU per dollar} = \frac{\text{Marginal Utility}}{\text{Price}}\).
Substitute the given values into the formula: \(\text{MU per dollar} = \frac{1.5}{0.50}\).
Perform the division to find the marginal utility per dollar spent on the fifth apple.
Interpret the result as the additional utility gained per dollar spent on that apple, which helps in understanding consumer choice and optimizing utility.
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