Maximizing utility since you and the market value pizza

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Reference no: EM131925711

Suppose that the MRS is 4 cups of coffee per pizza and that the prices of coffee and pizza are $2.50 and $10 respectively. In this situation:

Select one:

a. You are maximizing utility since you and the market value pizza relative to coffee in the same way.

b. You should purchase more cups of coffee because the MRS is greater than the price of a cup of coffee.

c. You are not maximizing utility since the MRS is equal to 4 but the price ratio is equal to 1/4.

d. You should purchase more pizzas because the price of a pizza is greater than the MRS.

Reference no: EM131925711

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