Answer to Question #32633 in Economics of Enterprise for abdouli
a- Salem should make no change in consumption.
b-given another dollar, Salem should buy an additional unit of Beta.
c- in order to maximize utility, Salem should buy more of Beta and less of Alpha.
d- in order to maximize utility, Salem should buy more of Alpha and less of Beta.
In order to maximize utility MUa/Pa = MUb/Pb. As this equality isn't right in our case, Salem shoud buy more of Alpha, as with the same price it gives higher marginal utility.
So, the right answer is d.
Need a fast expert's response?Submit order
and get a quick answer at the best price
for any assignment or question with DETAILED EXPLANATIONS!