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Juan Spends All of His Income on Baseball Cards and Candy

Question 24

Multiple Choice

Juan spends all of his income on baseball cards and candy. At his current consumption bundle, the marginal utility of baseball cards is 20 and the marginal utility of candy is 10. Assuming that diminishing marginal utility applies to both goods, if the price of baseball cards is $10 and the price of candy is $2, Juan should:


A) consume more baseball cards and less candy.
B) consume more candy and fewer baseball cards.
C) continue to consume the current bundle.
D) consume equal amounts of baseball cards and candy.

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