Fernando allocates his lunch money between pizza and Coke.A Coke has a price of $1 and a slice of pizza has a price of $1.50.The marginal utility of the last slice of pizza Fernando ate today was 30, and the marginal utility of his last Coke was 25.Fernando spent all of his lunch money.From this information we can conclude that
A)Fernando allocated his money in a way that maximized his total utility
B)Fernando's total utility would have been greater if he had purchased more Coke and less pizza
C)Fernando's total utility would have been greater if he had purchased more pizza and less Coke
D)Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza
E)Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke

Question

Quizplus · Accepted Answer

Fernando's marginal utility per dollar spent on pizza (30/1.50 = 20) is less than that for Coke (25/1), indicating he would gain more utility by purchasing more Coke and less pizza.

Fernando Allocates His Lunch Money Between Pizza and Coke