Bottles of Soda Slices of Pizza

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.Ali has $14 in his budget.When Ali maximizes his utility,his total utility equals
A) 6.
B) 9.
C) 69.
D) 61.
E) None of the above answers is correct.

Question

Bottles of Soda	Slices of Pizza
 
-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.Ali has $14 in his budget.When Ali maximizes his utility,his total utility equals
A) 6. 
B) 9. 
C) 69. 
D) 61. 
E) None of the above answers is correct.

Quizplus · Accepted Answer

To find the combination of soda and pizza that maximizes Ali's utility within his budget constraint, we need to calculate the marginal utility per dollar spent on each item.

For soda, the marginal utility per dollar spent is:

MU soda / Price soda = (14-4)/4 = 2

For pizza, the marginal utility per dollar spent is:

MU pizza / Price pizza = (22-16)/2 = 3

We can see that pizza provides a higher marginal utility per dollar spent than soda, so Ali should spend all his budget on pizza. Thus, Ali can buy 7 slices of pizza with his $14 budget, which would give him a total utility of 61.