Crackerjacks cost twice as much as Doritos. Fred maximizes utility by buying eight boxes of Crackerjacks and some number of bags of Doritos. If the last box of Crackerjacks gives Fred 100 units of utility, you can conclude that:
A) Fred has also bought 16 bags of Doritos.
B) the marginal utility of the last bag of Doritos Fred bought is 50 units.
C) the total utility of the bags of Doritos Fred bought is 200 units.
D) Fred has also bought four bags of Doritos.

Question

Quizplus · Accepted Answer

Fred maximizes utility when the marginal utility per dollar spent is equal for both goods. Since Crackerjacks cost twice as much as Doritos, the marginal utility of the last bag of Doritos must be half that of the last box of Crackerjacks, which is 50 units.

Crackerjacks Cost Twice as Much as Doritos