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Question
A consumer has spent all of his funds on hamburgers and movies. The price of a hamburger is
$1 and the price of a movie is $5. The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40. This consumer has
A) not maximized utility. To maximize utility, he should cut back on movies and buy more hamburgers.
B) not maximized utility. To maximize utility, he should cut back on hamburgers and buy more movies.
C) not maximized utility. To maximize utility, he should cut back consumption of each.
D) maximized utility.
Answer
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