Refer to the information provided in Table 6.2 below to answer the question(s) that follow.
Table 6.2
$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Number of } \
\text { Candy Bars per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 40 & \
\hline 2 & 75 & \
\hline 3 & 100 & \
\hline 4 & 115 & \
\hline 5 & & 5 \
\hline \begin{array} { c }
\text { Number of } \
\text { Hot Dogs per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 54 & \
\hline 3 & 72 & \
\hline 4 & 84 & \
\hline 5 & & 6 \
\hline
\end{array}$$
-Refer to Table 6.2. If the price of a candy bar is $1, the price of a hot dog is $2, and Aaron has $6 of income, Aaron's utility-maximizing combination of candy bars and hot dogs per day is
A) 1 candy bar and 2 hot dogs.
B) 4 candy bars and 1 hot dog.
C) 2 candy bars and 1.5 hot dogs.
D) indeterminate from this information.

Question

Refer to the information provided in Table 6.2 below to answer the question(s) that follow.
Table 6.2
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Candy Bars per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 40 & \
\hline 2 & 75 & \
\hline 3 & 100 & \
\hline 4 & 115 & \
\hline 5 & & 5 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Hot Dogs per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 54 & \
\hline 3 & 72 & \
\hline 4 & 84 & \
\hline 5 & & 6 \
\hline
\end{array}$$
-Refer to Table 6.2. If the price of a candy bar is $1, the price of a hot dog is $2, and Aaron has $6 of income, Aaron's utility-maximizing combination of candy bars and hot dogs per day is
A) 1 candy bar and 2 hot dogs.
B) 4 candy bars and 1 hot dog.
C) 2 candy bars and 1.5 hot dogs.
D) indeterminate from this information.

Quizplus · Accepted Answer

To maximize utility, Aaron should aim for the highest marginal utility per dollar spent. From the table, the marginal utility of the 5th candy bar is 5, and the marginal utility of the 5th hot dog is 6. However, we need to calculate the marginal utility per dollar, which is not directly provided but can be inferred for the earlier items. For candy bars, the marginal utility from 1 to 2 is 35 (75-40), from 2 to 3 is 25 (100-75), and from 3 to 4 is 15 (115-100). Thus, the marginal utility per dollar for the 4th candy bar is 15 (since each candy bar costs $1). For hot dogs, the marginal utility from 1 to 2 is 24 (54-30), from 2 to 3 is 18 (72-54), and from 3 to 4 is 12 (84-72). Thus, the marginal utility per dollar for the 4th hot dog is 6 (since each hot dog costs $2). Given $6, Aaron can afford either 6 candy bars, 3 hot dogs, or combinations thereof. However, the combination of 4 candy bars and 1 hot dog costs exactly $6 and offers a high marginal utility per dollar spent before reaching the 5th item's lower marginal utility. This combination uses his budget efficiently while maximizing utility based on the given data.

Refer to the Information Provided in Table 6 -Refer to Table 6