Jack and Jill are in the checkout lineat Walmart. In Jack’s basket he has 4 DIGIORNO Original Thin CrustSupreme Frozen Pizza and 2 half-gallons of Blue Bell Chocolate ChipCookie Dough. Jill has in her basket 6 of the DIGIORNO pizzas and 1half-gallon of the Blue Bell ice cream. You know that the pizza areselling for $5.00 each while ice cream costs $4.00 per half-gallon.If both Jack and Jill are utility maximizers, which of thefollowing statements is incorrect.
- Jack and Jill have different budgets to spend on pizzas and icecream.
- Given what is in his basket, Jack’s marginal utility for pizzasis 1.25 his marginal utility for ice cream.
- Jill’s marginal rate of substitution between pizzas and icecream is larger than Jack’s since she has more pizzas than icecream in her basket compared to the ratio in Jack’s basket.
- Given what is in her basket, Jill’s marginal utility for icecream is 0.8 her marginal utility for pizzas.
- All the above are correct.
