Gets twice as much marginal utility from additional bottle

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Q. Consider the subsequent story: "When Joe didn't have car insurance, he drove very cautiously since he knew he would have to pay for any damage to his car. Now that he has car insurance, he drives like a maniac since he knows that even if he gets into an accident, his insurance will cover it."

Q. Evan gets twice as much marginal utility from an additional bottle of water than from an additional bottle of soda. If the price of soda is $1.00 every bottle, then Evan is maximizing utility if the price of a bottle of water is

 

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