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Assume That You Allocate Your Income to Calzones and Juice

Question 75

Multiple Choice

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget.If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would


A) eat a fourth calzone because it has higher marginal utility
B) drink a third glass of juice
C) drink a third glass of juice if its price is lower than the price of calzones
D) drink a third glass of juice if its price is less than half the price of the calzone
E) drink a third glass of juice because it has lower marginal utility

Correct Answer:

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