Table 7.6
-Refer to Table 7.6.Pete has $10 to spend.He buys two cookies and four candies.Using the equimarginal rule,which of the following is true?
A) Pete is maximizing his utility.
B) Pete is not spending the entire $10.
C) Pete could make himself better off by buying less candy and more cookies.
D) Pete could make himself better off by buying less cookies and more candy.

Question

Table 7.6
-Refer to Table 7.6.Pete has $10 to spend.He buys two cookies and four candies.Using the equimarginal rule,which of the following is true?
A) Pete is maximizing his utility. 
B) Pete is not spending the entire $10. 
C) Pete could make himself better off by buying less candy and more cookies. 
D) Pete could make himself better off by buying less cookies and more candy.

Quizplus · Accepted Answer

The equimarginal rule states that consumers maximize their utility when the last dollar spent on each good or service yields the same level of marginal utility. If Pete follows this rule by buying two cookies and four candies with his $10, it implies he has allocated his budget in a way that maximizes his utility given the prices and his preferences.

Table 7.6 -Refer to Table 7.6.Pete Has $10 to Spend.He Buys Two