Sarah consumes only strawberries and cream, and she is spending all of her income. Her marginal utility of her last dish of strawberries is 200 and her marginal utility of her last pint of cream is 200. The price of strawberries is $1.00 per dish and the price of cream is $2.00 per pint. To maximize her utility, Sarah should
A) buy more strawberries and less cream.
B) buy more cream and less strawberries.
C) not change her purchases of strawberries and cream.
D) definitely buy no cream at her consumer equilibrium.

Question

Quizplus · Accepted Answer

Sarah should buy more strawberries and less cream because the marginal utility per dollar spent on strawberries (200/1 = 200) is greater than that on cream (200/2 = 100).

Sarah Consumes Only Strawberries and Cream, and She Is Spending