Tori Devotes All of Her Income to the Consumption of Peanut

question 42

Multiple Choice

Tori devotes all of her income to the consumption of peanut butter and jelly. She has just discovered that at her current level of consumption the marginal utility of a jar of peanut butter is 5 and the marginal utility of a jar of jelly is 7. Which of the following statements is TRUE?

• A) To maximize her total utility, Tori should consume more of both goods.
• B) To maximize her total utility, Tori should consume less of both goods.
• C) To maximize her total utility, Tori should consume more peanut butter and less jelly.
• D) There is not enough information provided to justify a change in Tori's level of consumption.

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Definitions:

Utility Function

Mathematical representation of a consumer's preference ranking for a set of goods and services.

Budget Equation

A balance formula that represents the relationship between income, expenses, and savings within a specified period.

Entry Fee

A charge that must be paid to gain access to a particular service, activity, or location.

Consumption

Refers to the act of using goods and services to satisfy needs and wants.