-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's budget increases from $70 to $88, how many magazines does Jane purchase at her consumer equilibrium?
A) five
B) six
C) seven
D) eight

Question

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's budget increases from $70 to $88, how many magazines does Jane purchase at her consumer equilibrium?
A) five 
B) six 
C) seven 
D) eight

Quizplus · Accepted Answer

At consumer equilibrium, Jane will allocate her budget such that the marginal utility per dollar spent on magazines equals the marginal utility per dollar spent on CDs. With a budget of $88, Jane can purchase a combination of magazines and CDs that maximizes her utility. By calculating the marginal utility per dollar for each option and considering her budget constraint, Jane will purchase seven magazines to reach equilibrium.

-The Table Above Gives Jane's Total Utility from Magazines and CDs