What does marginal utility per dollar spent tell mean

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The marginal utility for consuming cake (MUC) is 28 and the marginal utility for consuming beer (MUB) is 12. The price of cake (Pc) is $7 and the price for beer (PB) is $4. Find the marginal utility per dollar spent for cake and for beer. What does marginal utility per dollar spent tell mean? If the marginal utility per spent are not the same for both goods what has to occur for the consumption bundle to be optimal? Adjust the price for one of the good to make the consumption bundle optimal. Show the calculation again for each marginal utility per dollar spent with the new price. Which principle says that if the price of one good increase you will decrease your consumption of that good in favor of another good (Use the slides for information to complete these questions, the book will help too)?

Reference no: EM131076317

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What does marginal utility per dollar spent tell mean : The marginal utility for consuming cake (MUC) is 28 and the marginal utility for consuming beer (MUB) is 12. The price of cake (Pc) is $7 and the price for beer (PB) is $4. Find the marginal utility per dollar spent for cake and for beer. What does m..

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