Suppose that Jen receives 400 units of utility from her last soft drink and 200 units of utility from her last slice of pizza. What can we conclude about Jen's choices if the price of a soft drink is $1 and the price of a slice of pizza is $2?
A) Jen needs to buy less soft drink and less pizza to maximise her utility.
B) Jen should buy more pizza to maximise her utility.
C) Jen should buy more soft drink to maximise her utility.
D) Jen is maximising utility because she buys more of the good providing the most utility.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

With a price of $1 for a soft drink and $2 for a slice of pizza, Jen receives more utility per dollar spent on soft drinks as opposed to pizza (400 utility/$1 compared to 100 utility/$1 for pizza). Therefore, to maximize her utility, Jen should purchase more soft drinks and less pizza.

Suppose That Jen Receives 400 Units of Utility from Her