Terence has $50 per week to spend on Subway sandwiches and milkshakes.The price of a Subway sandwich is $5 and the price of a milkshake is $4.He buys 6 sandwiches and 5 milkshakes.The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24.Which of the following is true?
A) He is not maximising his utility and should buy more milkshakes.
B) He is maximising his utility.
C) He is not maximising his utility and should buy more Subway sandwiches.
D) He is not maximising his utility because he is not spending all of his income.
Correct Answer:
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