Sharon purchases two products with a given fixed budget, orange juice and soda. Her marginal utility from orange juice is 60, and her marginal utility from soda is 30. The price of a bottle of orange juice is $2.00, and the price of soda is $1.00. These data suggest that
A)Sharon is maximizing her utility from the given fixed budget.
B)Sharon should buy more orange juice and less soda.
C)Sharon should buy more soda and less orange juice.
D)Sharon should buy less orange juice and soda.

Question

Quizplus · Accepted Answer

The marginal utility per dollar spent on orange juice (60/2 = 30) is equal to the marginal utility per dollar spent on soda (30/1 = 30), indicating that Sharon is maximizing her utility given her budget.

Sharon Purchases Two Products with a Given Fixed Budget, Orange