amount of utility
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The last cup of coffee I bought gave me a marginal utility of 10, bringing my total utility from all cups of coffee I have purchased to 200. The last pizza I bought gave me a marginal utility of 50, bringing my total utility from all pizzas purchased to 750 (I really like pizza!). The price of a cup of coffee is $2. The price of a pizza is $10. I have no more money to spend.
How might I have reallocated my spending so as to maximize my total satisfaction from pizza and coffee?
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Solution Summary
The amount of utility is measured.
Solution Preview
In this case, we do not need to worry about the total utilities. What matters here is only the marginal utility. We also need to assume that the person has $10 to either buy 1 pizza or 5 cups of ...
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