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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Definitions:

Marginal Benefit

The additional satisfaction or utility gained by consuming an extra unit of a good or service, a reiteration with different phrasing.

Patient Protection and Affordable Care Act (PPACA)

A federal law enacted in 2010 aimed at reducing healthcare costs and increasing health insurance coverage among Americans.

Personal Mandate

The requirement under the Patient Protection and Affordable Care Act (PPACA) of 2010 that all U.S. citizens and legal residents purchase health insurance unless they are already covered by employer-sponsored health insurance or government-sponsored health insurance (Medicaid or Medicare).

Government-provided Health Insurance

Health insurance schemes funded and managed by the government to offer medical coverage to its citizens.