At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is 14. Is Hannah maximizing her total utility?
A) No, she needs to buy more doughnuts and less coffee.
B) Yes, she is maximizing utility.
C) No, she needs to buy more coffee and fewer doughnuts.
D) No, she needs to buy fewer doughnuts and less coffee.

Question

Quizplus · Accepted Answer

Hannah is maximizing her total utility because the marginal utility per dollar is equal for both doughnuts and coffee, indicating an optimal allocation of her spending.

At Revolution Doughnuts in Fort Collins, Colorado, a Cup of Coffee