Sergio is maximizing utility in his consumption of beer and bubble gum.If the price of beer is greater than the price of bubble gum,then we know
A)Sergio buys more beer than bubble gum.
B)Sergio buys more bubble gum than beer.
C)the marginal utility from the last purchased beer is greater than the marginal utility from the last purchased bubble gum.
D)the marginal utility from the last purchased bubble gum is greater than the marginal utility from the last purchased beer.
E)the marginal utilities from the last purchased beer and bubble gum are equal.

Question

Quizplus · Accepted Answer

When maximizing utility, the ratio of marginal utility to price should be equal for all goods. If the price of beer is greater, the marginal utility of the last beer must also be greater to maintain this equality.

Sergio Is Maximizing Utility in His Consumption of Beer and Bubble