Gigi consumes only Perrier and cheese.In order to maximize her happiness subject to limited income,Gigi should purchase the amounts of Perrier and cheese at which
A)the addition to happiness of the last bottle of Perrier is the same as the addition to happiness of the last pound of cheese.
B)the addition to happiness per dollar spent on Perrier is the same as the addition to happiness per dollar spent on cheese.
C)she spends all her income.
D)both b and c
E)both a and c

Question

Quizplus · Accepted Answer

To maximize happiness subject to a budget constraint, an individual should equalize the marginal utility per dollar spent across all goods (choice B) and spend all their income (choice C). This ensures the most efficient allocation of resources for maximum satisfaction.

Gigi Consumes Only Perrier and Cheese