Kevin spends his entire daily budget on pretzels, at a price of $3 each, and beer at
Question:
Kevin spends his entire daily budget on pretzels, at a price of $3 each, and beer at a price of $6 each. At his current consumption bundle, the marginal utility of pretzels is 12 and the marginal utility of beer is 30. Kevin should
Group of answer choices
do nothing; he is consuming his utility maximizing combination of pretzels and beer.
increase his consumption of pretzels until the marginal utility of pretzels consumption equals 30.
decrease his consumption of pretzels and increase his consumption of beer until the marginal utility per dollar is equal for both goods.
decrease his consumption of pretzels until the marginal utility of pretzels consumption equals 30.
Macroeconomics Principles, Applications, and Tools
ISBN: 978-0132555234
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez