If Katie purchases two slices of pizza and six breadsticks to maximize her total utility,then
A)a slice of pizza costs three times as much as a breadstick.
B)her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick.
C)a breadstick costs three times as much as a slice of pizza.
D)she spends more on pizza than she spends on breadsticks.
E)her marginal utility from the second slice of pizza equals her marginal utility from the sixth breadstick.

Question

Quizplus · Accepted Answer

When Katie is trying to maximize her total utility, she will continue consuming pizza and breadsticks until the marginal utility per dollar spent on each item is equal. This means that the last unit of pizza and breadsticks that Katie consume should provide her the same level of satisfaction per dollar spent. This is given in option B, where her marginal utility from the second slice of pizza (last slice) divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick (last breadstick) divided by the price of a breadstick. This is the condition that needs to be met for her to maximize her total utility.

If Katie Purchases Two Slices of Pizza and Six Breadsticks