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Question
The price of a hamburger is $1, and the price of a movie is $6. The consumer has purchased 2 hamburgers and 2 movies, and her marginal utility from the second hamburger is 20 and from the second movie is 120. The consumer has an income of $21. This combination of goods
A) maximizes utility and is an optimum because the marginal utility of the last dollar spent on each good is the same.
B) maximizes utility because the marginal utility of the last dollar spent on each good is the same, but it is not an equilibrium because marginal utility is not zero.
C) is not an optimum because the consumer has not spent all of her money.
D) is not an optimum because the marginal utility of the last dollar spent on each good is not the same.
Answer
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