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22 April, 04:29

Suppose Barry is maximizing his utility from consuming used paperback novels and audio books. The price of a used novel = $4 and the price of an audio book = $8. If the marginal utility of the last novel was 32 units of utility (utils) what was the marginal utility of the last audio book purchased? A. 2 utils B. 12 utils C. 16 utils

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  1. 22 April, 06:20
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    None of the answers is correct, it should be 64 utils

    Explanation:

    If Barry's utility from consuming a used novel is 32 utils and the book costs $4, he was able to get 8 utils per dollar ( = 32 / $4).

    If an audio book costs $8, then Barry should obtain $8 x 8 utils per dollar = 64 utils.
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