Eating a steak gives Jim satisfaction equal to 55 utils, whereas eating hamburger gives him a satisfaction of 25 utils. Jim should:
A) always choose to eat steak over hamburger.
B) always choose to eat hamburger over steak.
C) eat steak only if it is cheaper than hamburger.
D) eat hamburger only if he has recently eaten steak.
E) eat hamburger only if it is cheaper than steak.

Question

Quizplus · Accepted Answer

According to the principle of utility maximization, Jim should consume the good that gives him the highest level of satisfaction per unit of cost. Given that steak gives him 55 utils and hamburger gives him 25 utils, but steak is more expensive than hamburger, Jim should choose hamburger. Therefore, he should eat hamburger only if it is cheaper than steak.

Eating a Steak Gives Jim Satisfaction Equal to 55 Utils