Mrs. Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 40 utils and the marginal utility of the last bag is 60 utils. The prices of soda and pretzels are $0.75 per bottle and $1 per bag, respectively. It can be concluded that Multiple Choice the two commodities are substitute goods. Mrs. Arnold should spend less on pretzels and more on soda. Mrs. Arnold should spend less on soda and more on pretzels. Mrs. Arnold is buying soda and pretzels in the utility-maximizing amounts.
Mrs. Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 40 utils and the marginal utility of the last bag is 60 utils. The prices of soda and pretzels are $0.75 per bottle and $1 per bag, respectively. It can be concluded that Multiple Choice the two commodities are substitute goods. Mrs. Arnold should spend less on pretzels and more on soda. Mrs. Arnold should spend less on soda and more on pretzels. Mrs. Arnold is buying soda and pretzels in the utility-maximizing amounts.
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.5P
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Transcribed Image Text:Mrs. Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 40 utils and the marginal utility of the last bag is 60 utils. The
prices of soda and pretzels are $0.75 per bottle and $1 per bag, respectively. It can be concluded that
Multiple Choice
the two commodities are substitute goods.
Mrs. Arnold should spend less on pretzels and more on soda.
Mrs. Arnold should spend less on soda and more on pretzels.
Mrs. Arnold is buying soda and pretzels in the utility-maximizing amounts.
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