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Suppose that the price of Colby jack cheese is $4 per pound, and the price of Swiss cheese is $6 per pound. If the person gets 30 utils from the last pound of Swiss cheese they consume, how many utils would they have to get from the last pound of Colby jack cheese in order to be in consumer equilibrium?

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Answer:

20 utils

Explanation:

In order to ensure consumer equilibrium, the ratio between the marginal utility and the cost per unit of all products must be the same.

In this case the marginal utility per dollar for both the Colby Jack cheese (C) and for the Swiss cheese (S) are:

[tex]\frac{U_C}{P_C}=\frac{U_S}{P_S} \\\frac{U_C}{\$4}=\frac{30}{\$6}\\ U_C = 20\ utils[/tex]

The person would have to get 20 utils from the last pound of Colby Jack cheese.

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