Bill uses his entire budget to purchase Pepsi and hamburgers, and he currently purchases no Pepsi and 6 hamburgers per week. The price of Pepsi is $1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 2, and his marginal utility from hamburgers is 6. Is Bill's current consumption decision optimal?
A) No, he should increase Pepsi consumption and reduce hamburger consumption.
B) No, he should purchase more of both goods.
C) Yes, the corner solution is best because his MRS is less than the price ratio.
D) We do not have enough information to answer this question.

Question

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The Answer of Bill uses his entire budget to purchase Pepsi and hamburgers, and he currently purchases no Pepsi and 6 hamburgers per week. The price of Pepsi is $1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 2, and his marginal utility from hamburgers is 6. Is Bill's current consumption decision optimal?
A) No, he should increase Pepsi consumption and reduce hamburger consumption.
B) No, he should purchase more of both goods.
C) Yes, the corner solution is best because his MRS is less than the price ratio.
D) We do not have enough information to answer this question.

Bill Uses His Entire Budget to Purchase Pepsi and Hamburgers