Diego Spends All of His Income on Milkshakes and French

question 132

Essay

Diego spends all of his income on milkshakes and French fries.At his current consumption levels the marginal utility of one milkshake and the marginal utility of one order of French fries are equal.According to the optimal consumption rule:
A.Diego is maximizing his utility.
B.Diego is maximizing his utility only if one milkshake and one order of French fries have the same price.
C.Diego should buy more milkshakes and fewer fries if a milkshake costs more than an order of fries.
D.Diego will maximize his utility by specializing in consumption and buying either milkshakes or fries but not both.

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