Suppose the price of a glass of orange juice is $2 and that of a glass of soft drink is $1. A utility-maximizing consumer would buy:
A)more glasses of juice as a glass of juice has higher marginal utility than a glass of soft drink.
B)more glasses of soft drink as a glass of soft drink has higher marginal utility than a glass of juice.
C)equal quantities of juice and soft drink as the marginal utilities of a glass of juice and a glass of soft drink are the same.
D)more soft drink as a glass of soft drink is cheaper than a glass of juice.
E)more glasses of juice as the ratio of total utility of an extra glass of juice to its price is more than that of a glass of juice .

Question

Suppose the price of a glass of orange juice is $2 and that of a glass of soft drink is $1. A utility-maximizing consumer would buy:​
A)more glasses of juice as a glass of juice has higher marginal utility than a glass of soft drink.
B)more glasses of soft drink as a glass of soft drink has higher marginal utility than a glass of juice.
C)equal quantities of juice and soft drink as the marginal utilities of a glass of juice and a glass of soft drink are the same.
D)more soft drink as a glass of soft drink is cheaper than a glass of juice.
E)more glasses of juice as the ratio of total utility of an extra glass of juice to its price is more than that of a glass of juice .

Quizplus · Accepted Answer

The consumer would buy more glasses of juice as a glass of juice has higher marginal utility than a glass of soft drink. Marginal utility refers to the additional utility or satisfaction gained from consuming one extra unit of a good, and since a glass of juice has a higher marginal utility than a glass of soft drink, the consumer would prefer to buy more glasses of juice to maximize their utility. Additionally, the price of the two drinks does not play a role in determining the consumer's choice in this case.

Suppose the Price of a Glass of Orange Juice Is