Author Question: Assume that you allocate your income to calzones and juice and that you have not yet spent your ... (Read 107 times)

HudsonKB16 · **on:** Jul 1, 2018

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget. If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would
a. eat a fourth calzone because it has higher marginal utility
b. drink a third glass of juice
c. drink a third glass of juice if its price is lower than the price of calzones
d. drink a third glass of juice if its price is less than half the price of the calzone
e. drink a third glass of juice because it has lower marginal utility

Question 2

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget. If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would
a. eat a fourth calzone because it has a higher marginal utility
b. drink a third glass of juice because you've had less juice
c. consider the total utility received so far from calzones and juice before deciding what to consume next
d. consider the relative prices of calzones and juice before deciding what to consume next
e. consider whether or not marginal utility is diminishing before deciding what to consume next