Terence Has $50 Per Week to Spend on Subway Sandwiches

question 296

Multiple Choice

Terence has $50 per week to spend on Subway sandwiches and milkshakes.The price of a Subway sandwich is $5 and the price of a milkshake is $4.He buys 6 sandwiches and 5 milkshakes.The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24.Which of the following is true?

• A)He is not maximizing his utility and should buy more milkshakes.
• B)He is maximizing his utility.
• C)He is not maximizing his utility and should buy more Subway sandwiches.
• D)He is not maximizing his utility because he is not spending all of his income.

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