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.

Question

Quizplus · Accepted Answer

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.

If Paloma Is Consuming the Utility-Maximizing Quantities of Pizza and Soda