Shaniq buys only soda and pizza and is buying the amounts that maximize her utility. The marginal utility from a soda is 30 and the price of a soda is $2. The marginal utility from a slice of pizza is also 30. The price of a slice of pizza must be
A) $30.
B) $2.
C) $1.
D) some amount that cannot be calculated without more information.

Question

Quizplus · Accepted Answer

To maximize utility, the marginal utility per dollar spent should be equal for all goods. Since the marginal utility of both soda and pizza is 30, and the price of soda is $2, the price of pizza must also be $2 to maintain equal utility per dollar.

Shaniq Buys Only Soda and Pizza and Is Buying the Amounts