Suppose that Reza buys two products and that the marginal utility of an additional carton of soy milk is 20 and its price is $1.25,whereas the marginal utility for an additional orange costing 50 cents is 7.
-Refer to the above information to answer this question.What can be deduced?
A)Reza should buy more oranges.
B)Reza should reduce his consumption of soya milk.
C)Reza should buy more soya milk.
D)Reza should divide his budget equally between soya milk and oranges.
E)Nothing can be deduced.

Question

Quizplus · Accepted Answer

The marginal utility per dollar spent on soy milk is higher than that of oranges (20/1.25 > 7/0.5). This means that Reza is getting more satisfaction per dollar spent on soy milk compared to oranges. Therefore, Reza should buy more soy milk.

Suppose That Reza Buys Two Products and That the Marginal