Fernando allocates his lunch money between pizza and Coke. A Coke has a price of $1 and a slice of pizza has a price of $1.50 . The marginal utility of the last slice of pizza Fernando ate today was 30, and the marginal utility of his last Coke was 25 . Fernando spent all of his lunch money. From this information we can conclude that
a. Fernando allocated his money in a way that maximized his total utility
b. Fernando's total utility would have been greater if he had purchased more Coke and less pizza
c. Fernando's total utility would have been greater if he had purchased more pizza and less Coke
d. Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza
e. Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke
B
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(Refer to the figure provided in the text.) For the share of income spent on food to remain constant as income rises, the Engel curve must
a. lie above the 45-degree line. b. lie below the 45-degree line. c. be equal to the 45-degree line. d. bisect the 45-degree line.
Last year, you earned a nominal wage of $10 per hour and the price level was 120 . This year your nominal wage is $11 per hour, but you are unable to purchase the same amount of goods as last year. The price level this year must be
a. 135 b. 132 c. 125 d. 121