Brian consumes only pizza and soda. When the price of a soda is $2 and the price of a slice of pizza is $4, Brian maximizes his utility by buying 5 sodas and 10 slices of pizza. If the marginal utility of the 5th soda is 100, then the marginal utility from the 10th slice of pizza must be
A) 200.
B) 100.
C) 50.
D) More information is needed to determine the marginal utility of the 10th slice of pizza.

Question

Quizplus · Accepted Answer

To maximize utility, the marginal utility per dollar spent on each good should be equal. The marginal utility per dollar for soda is 100/2 = 50. Therefore, the marginal utility of the 10th slice of pizza must be 50 * 4 = 200.

Brian Consumes Only Pizza and Soda