Suppose Lizzie consumes soda and pizza.If the last bottle of soda she drinks provides 100 units of utility per dollar while the last slice of pizza she eats provides 300 units of utility per dollar,
A) the demand curve for soda must have shifted outward.
B) the demand curve for pizza must have shifted inward.
C) Lizzie should buy more pizza and less soda to maximize her utility.
D) the indifference curve for soda and pizza must have rotated inward.
E) the marginal rate of substitution between soda and pizza equals 3.

Question

Quizplus · Accepted Answer

Since the last slice of pizza provides more utility per dollar than the last bottle of soda, Lizzie should buy more pizza and less soda to maximize her utility. This means that her demand for pizza has increased while her demand for soda has decreased, but without any indication of a shift in the demand curve. The marginal rate of substitution cannot be determined from the given information.

Suppose Lizzie Consumes Soda and Pizza