Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12 utils. How should Dan redirect his purchases so as to attain consumer equilibrium?

Question

Business

Birdie

3 September, 14:30

Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12 utils. How should Dan redirect his purchases so as to attain consumer equilibrium?

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Answers (1)

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Kaleigh Roberson · Answer 1

E) There is not enough information to answer the question.

Explanation:

In order to properly determine how should Dan redirect his purchases to increase the benefits he obtains from Coke and pizza, we need to know the price of Coke and pizza. That way we could determine the utils per dollar spent. Currently both Coke and pizza provide the same benefits, and if the price is the same for both, then Dan has already achieved consumer equilibrium. But if the price of pizza is higher than Coke's, then he should purchase more Coke, but if the price of Coke was higher than pizza, he should eat more pizza.