Author Question: Jason is trying to decide whether to buy a bagel or a muffin for breakfast. The bagel costs 0.50 and ... (Read 71 times)

BrownTown3 · **on:** Jun 30, 2018

Jason is trying to decide whether to buy a bagel or a muffin for breakfast. The bagel costs 0.50 and has a marginal utility of 5 . The muffin costs 1 and has a marginal utility of 20 . Which should he buy and why?
a. The muffin, because it has a higher marginal utility
b. The muffin, because it has a lower marginal utility
c. The bagel, because it costs less
d. The bagel, because it has a higher marginal utility per dollar
e. The muffin, because it has a higher marginal utility per dollar

Question 2

If marginal cost is increasing then:
a. marginal product must be increasing.
b. average variable cost must be increasing.
c. average total cost must be increasing.
d. none of the above must necessarily be true.