Refer to Table 10-3. The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lime Fizz Soda. The price of an ice cream cone is $2 and the price of Lime Fizz Soda is $1
Use this information to select the correct statement.
A) If Lee has an unlimited budget he will maximize his utility by buying only Lime Fizz Soda.
B) We cannot determine how many ice cream cones and cans of Lime Fizz Soda Lee will consume without knowing what his income is.
C) To maximize his utility Lee should consume 1 ice cream cone and 5 cans of Lime Fizz Soda.
D) We cannot determine how many ice cream cones and cans of Lime Fizz Soda will maximize Lee's utility because we are given only the marginal utility per dollar values. We also need to know the marginal utility for each quantity.
B
You might also like to view...
Differentiate between a pure strategy and a mixed strategy
What will be an ideal response?
Explain how discretionary monetary policy may have brought about the end of the Great Moderation and ushered in the Great Recession
What will be an ideal response?
A liquidity trap occurs when the
a. LM curve is steep. b. LM curve is vertical. c. LM curve is relatively flat. d. IS curve is flat.
Which of the following is not a type of economic analysis?
a. None of these choices is a type of economic analysis. b. Normative c. Resources d. Positive