Question
Aizat has amount of budget that he spends on milo and sandwich only. He realizes that his satisfaction is maximum when he buys 3 glasses
Aizat has amount of budget that he spends on milo and sandwich only. He realizes that his satisfaction is maximum when he buys 3 glasses of milo and 3 packets of sandwich. His marginal utility from the last ringgit spent of those goods are as below
Quantity = 3 units
Marginal utility from milo = 25
Marginal utility from sandwich = 30
Based on the cardinal approach, calculate the price of milo if the price of sandwich is RM6 per packet
and
If the price of sandwich increase, should he raise or reduce his quantity purchase of milo in order to maintain his maximum satisfaction. Justify your answer (quantity purchased of sandwich remain unchanged at 3 units and price of milo also does not change).
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