Asked by Elizabeth Hubbard on Jul 03, 2024
Verified
If Paloma is consuming the utility-maximizing quantities of pizza and soda pop:
A) the price of pizza equals the price of soda pop.
B) the marginal utility of pizza is equal to the marginal utility of soda pop.
C) the ratio of the marginal utility to price is the same for pizza as it is for soda pop.
D) the total utility of pizza is equal to the total utility of soda pop.
Utility-Maximizing
The process or strategy of selecting the combination of goods and services that provides the highest level of satisfaction or utility to an individual.
Pizza
A popular dish of Italian origin, consisting of a flat round base of dough baked with a topping of tomato sauce and cheese, often with added meats, vegetables, or other ingredients.
Soda Pop
A carbonated soft drink available in various flavors, often sweetened and served chilled.
- Acknowledge the equal marginal utility per dollar spent criterion in utility optimization.
Verified Answer
DP
David PerkinsJul 07, 2024
Final Answer :
C
Explanation :
When consuming the utility-maximizing quantities of pizza and soda pop, the consumer will allocate their spending in such a way that the marginal utility per dollar spent is the same for both goods. This means that the ratio of the marginal utility to price is the same for pizza as it is for soda pop. Therefore, choice C is the correct answer.
Learning Objectives
- Acknowledge the equal marginal utility per dollar spent criterion in utility optimization.