Mr Smith Is Consuming Beer and Wine

question 436

Multiple Choice

Mr. Smith is consuming beer and wine. At his current level of consumption, the marginal utility per dollar is 30 units for beer and 20 units for wine. Mr. Smith should

• A) consume twice as much beer as wine.
• B) consume twice as much wine as beer.
• C) increase his consumption of beer relative to wine.
• D) increase his consumption of wine relative to beer.

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