If the marginal utilities are constant for travel and food and the marginal utility per dollar of travel is 50 and the marginal utility per dollar of food is 30:
A) the total utility of food and travel is 80.
B) we can gain 20 units of net utility by spending one less dollar on food and one more dollar on travel.
C) we can gain 20 units of net utility by spending one more dollar on food and one less dollar on travel.
D) we can gain 30 units of net utility by spending one less dollar on food and one more dollar on travel.

Question

Quizplus · Accepted Answer

The marginal utility per dollar of travel is 50 and the marginal utility per dollar of food is 30. So, if we spend one less dollar on food and one more dollar on travel, we will gain 20 units of net utility (50 - 30 = 20).

If the Marginal Utilities Are Constant for Travel and Food