Podrick enjoys consuming sandwiches (S) and juice boxes (J). Suppose that Podrick has $20 in his budget, the price of a sandwich is $4, and the price of a juice box is $2. If Podrick spends all of his $20 budget and has maximized his utility, which of the following must be true?
A) The marginal utility of a juice box is equal to the marginal utility of a sandwich.
B) The marginal utility of a juice box is twice the marginal utility of a sandwich.
C) The marginal utility of a juice box is three times the marginal utility of a sandwich.
D) The marginal utility of a juice box is half of the marginal utility of a sandwich.

Question

Quizplus · Accepted Answer

The marginal utility per dollar spent should be equal for both goods. Since the price of a juice box is half that of a sandwich, the marginal utility of a juice box should be half of the marginal utility of a sandwich to maximize utility.

Podrick Enjoys Consuming Sandwiches (S) and Juice Boxes (J)