Pizza CDs -Bobby Spends $100 Per Month on Pizza and CDs. His

question 101

Multiple Choice

Pizza CDs

-Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Bobby currently buys 2 pizzas and 6 CDs. To maximize his utility in the next period, he should

• A) buy more pizza and fewer CDs.
• B) buy more CDs and fewer pizza.
• C) buy more of both goods.
• D) stay with the current combination of goods.

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Definitions:

Taxed

Subjected to a compulsory financial charge or levy by governmental organizations for the funding of state expenditures.

Worse Off

A situation or condition in which an individual or group is in a less favorable position than before.

Demand Curve

A graph showing the relationship between the price of a good and the amount of it that consumers are willing to purchase at various prices.

Levied

Imposed, typically referring to taxes, duties, or charges officially imposed by a government authority.