Suppose that for Merv the marginal utility of $50-per-serving caviar is 100 and the marginal utility of $1-per-serving popcorn is 10. For his snack, Merv should buy:
A) the caviar if he has the $50; otherwise, the popcorn.
B) the caviar if he has the $50; otherwise, nothing.
C) the popcorn, whether he has the $50 or not.
D) one serving each of the caviar and popcorn, if he has $51.
E) five servings of popcorn for each serving of caviar.
Correct Answer:
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