A child is given $5.20 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Which combination would give the child the maximum utility out of spending $5.20?
A)8 chocolates and 2 hard candies
B)5 chocolates and 4 hard candies
C)3 chocolates and 5 hard candies
D)2 chocolates and 4 hard candies

Question

A child is given $5.20 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table.  Which combination would give the child the maximum utility out of spending $5.20?
A)8 chocolates and 2 hard candies 
B)5 chocolates and 4 hard candies 
C)3 chocolates and 5 hard candies 
D)2 chocolates and 4 hard candies

Quizplus · Accepted Answer

The Answer of A child is given $5.20 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table.  Which combination would give the child the maximum utility out of spending $5.20?
A)8 chocolates and 2 hard candies 
B)5 chocolates and 4 hard candies 
C)3 chocolates and 5 hard candies 
D)2 chocolates and 4 hard candies

A Child Is Given $5