Question

2-Mohamed purchases two products, mineral water and popcorn. The marginal utility of mineral water is 60 and the marginal utility of popcorn is 30. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.00. The utility-maximizing rule suggests that Mohamed should:

a-increase consumption of popcorn and decrease consumption of mineral water.
b-increase consumption of popcorn and increase consumption of mineral water.
c-decrease consumption of popcorn and increase consumption of mineral water.
d-make no change in the consumption of mineral water or popcorn.

Answer 1

We have that:

$$\left\{ \begin{array}{l} \frac {M U _ {\text {water}}}{P _ {\text {water}}} = \frac {6 0}{2} = 3 0 \\ \frac {M U _ {\text {popcorn}}}{P _ {\text {popcorn}}} = \frac {3 0}{1} = 3 0 \end{array} \right. \Rightarrow$$

$\Rightarrow$ Mohamed should make no change in the consumption of mineral water and popcorn $\Rightarrow$

$\Rightarrow$ Answer: d.

Answer: d.