Joe Consumes Pizza and Movies

question 205

Multiple Choice

Joe consumes pizza and movies. He is currently spending his entire income and his marginal utility of pizza is 10 and his marginal utility of movies is 5. If the price of a pizza is $10 and the price of a movie is $5, then to maximize his utility Joe should

• A) increase consumption of pizza and decrease consumption of movies.
• B) increase consumption of movies and decrease consumption of pizza.
• C) not change his current bundle of movies and pizza.
• D) increase consumption of both goods.

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Definitions:

Foreign Currency

The currency used in a country other than the one where a company or individual is located, impacting financial transactions and reports when exchanged.

Canadian Dollars

The official currency of Canada, often represented by the symbol CAD.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Initial Sale

The first sale of a product or offering of shares to the public or an investor by a company.