Biology Forums - Study Force

The price of a piece of pizza is $1 and the price of a movie is $6 and the consumer has $14. A consumer has purchased 2 pieces of pizza and 2 movies, receiving 20 units of utility for the second piece of pizza and 100 units of utility for the second movie. When the consumer spends all her income, the set of goods

• is an optimum since the entire income is spent and total utility is maximized.

• is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.

• is not an optimum because the marginal utility per dollar spent is greater for pizza than for movies and the consumer is not spending all of his income.

• is not an optimum because the marginal utility for each good is not equal.

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