Daniel enjoys both soda and pizza,allocating his purchases across these two goods so that his utility is maximized.If Daniel receives one-third as much utility from the last can of soda as from the last slice of pizza,we can say that:
A) the price of pizza is one-third that of soda.
B) the price of pizza is equal to that of soda.
C) the price of pizza is twice that of soda.
D) the price of pizza is three times that of soda.

Question

Quizplus · Accepted Answer

To maximize utility, the marginal utility per dollar spent on each good should be equal. If the utility from the last can of soda is one-third that of the last slice of pizza, then the price of pizza must be three times that of soda to equalize the marginal utility per dollar.

Daniel Enjoys Both Soda and Pizza,allocating His Purchases Across These