If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then
A) a slice of pizza costs three times as much as a breadstick.
B) a breadstick costs three times as much as a slice of pizza.
C) her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick.
D) Both answers A and C are correct.

Question

Quizplus · Accepted Answer

To maximize total utility, Katie should allocate her budget such that the marginal utility per dollar spent is equal for both goods. This means the marginal utility from the second slice of pizza divided by its price should equal the marginal utility from the sixth breadstick divided by its price.

If Katie Purchases Two Slices of Pizza and Six Breadsticks