Question

Sue gets a total of 20 utils per week from her consumption of pizza and a totalof 40 utils per week from her consumption of yogurt. The price of pizza is $1per slice, the price of yogurt is $1 per cup, and she consumes 10 slices of pizzaand 20 cups of yogurt each week.

a. True
b. False

Answer 1

The last part of the question is missing:

• Sue is consuming the optimal combination of pizza and yogurt.

The answer is TRUE

Since Sue obtains 20 utils form consuming pizza and spends $10, her utility per dollar obtained from consuming pizza = 20 / $10 = 2 util per dollar.

Since Sue obtains 40 utils form consuming yogurt and spends $20, her utility per dollar obtained from consuming yogurt = 40 / $20 = 2 util per dollar.

Since she obtains the same number of utils per dollar from pizzas and yogurt, then she is consuming the optimal combination.