Sergio consumes only beef and snails and is maximizing his utility. If the price of beef is less than the price of snails, then we definitely know that
A) Sergio buys more beef than snails.
B) Sergio buys more snails than beef.
C) the marginal utility from the last pound of beef purchased is greater than the marginal utility from the last pound of snails purchased.
D) the marginal utility from the last pound of snails purchased is greater than the marginal utility from the last pound of beef purchased.

Question

Quizplus · Accepted Answer

When maximizing utility, the ratio of marginal utility to price should be equal for all goods. If beef is cheaper, the marginal utility per dollar spent on beef must be lower than that of snails, meaning the marginal utility of the last pound of snails is greater.

Sergio Consumes Only Beef and Snails and Is Maximizing His