Tran currently consumes only milk and cereal. She drinks 4 quarts of milk priced at $3 per quart and gets 30 utils for the last quart. She consumes eight boxes of cereal at a price of $6 per box and gets 60 utils for the last box. Is Tran maximizing her utility?
A) No. She should consume more milk.
B) No. She should consume more honey.
C) Yes.
D) No. She should consume more of both goods.

Question

Quizplus · Accepted Answer

Tran is maximizing her utility because she is consuming the combination of milk and cereal that gives her the highest total utility. She is getting 30 utils for the last quart of milk and 60 utils for the last box of cereal, so she is consuming the optimal amount of each good.

Tran Currently Consumes Only Milk and Cereal