The Price of a Hamburger Is $1, and the Price

question 150

Multiple Choice

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.

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