Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her limited income.The last bag of candy gave Lulu the same additional utility as the last bag of cookies,and the prices of candy and cookies are the same.Lulu
A)is maximizing utility given a limited income because the prices of candy and cookies are the same.
B)is maximizing satisfaction given a limited income because the marginal utility per dollar is the same for candy and cookies.
C)could get more satisfaction from the same income by buying more candy and less cookies.
D)could get more satisfaction from the same income by buying more cookies and less candy.

Question

Quizplus · Accepted Answer

Lulu is maximizing satisfaction given a limited income because the marginal utility per dollar is the same for candy and cookies, which is a condition for utility maximization according to the principle of equal marginal utility per dollar spent.

Lulu Consumes Only Candy and Cookies; She Is Currently Buying