During a study session for an economics exam with three other students, Peter Daltry commented on an example of a consumer who had to decide the on number of slices of pizza and cups of Coca-Cola he would consume. Peter explained that "To maximize his utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct?
A) Peter described one of the conditions necessary for utility maximization. The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola.
B) Peter's statement is correct.
C) Peter's statement is correct, but we must also assume that the consumer is rational.
D) Peter describes one of the conditions necessary for utility maximization. The second condition is that total spending on both goods must equal the amount available to be spent.

Question

Quizplus · Accepted Answer

Peter's statement is correct in describing one condition for utility maximization, but the consumer must also ensure that total spending equals the budget.

During a Study Session for an Economics Exam with Three