The following table shows the marginal benefit that Marcus derives by consuming different quantities of hotdog and soda. The price of a hotdog is $3, and the price of a soda is $1.

-Refer to the table above.What is the optimal combination of Soda and Hotdog for Marcus,if his weekly budget for hotdog and soda is $10?
A) 2 sodas, and 4 hotdogs
B) 3 sodas, and 3 hotdogs
C) 6 sodas, and 5 hotdogs
D) 4 sodas, and 2 hotdogs

Question

The following table shows the marginal benefit that Marcus derives by consuming different quantities of hotdog and soda. The price of a hotdog is $3, and the price of a soda is $1.
 
-Refer to the table above.What is the optimal combination of Soda and Hotdog for Marcus,if his weekly budget for hotdog and soda is $10?
A) 2 sodas, and 4 hotdogs 
B) 3 sodas, and 3 hotdogs 
C) 6 sodas, and 5 hotdogs 
D) 4 sodas, and 2 hotdogs

Quizplus · Accepted Answer

To maximize the total utility within the budget constraint of $10, Marcus should choose the combination that gives him the highest marginal utility per dollar. Looking at the table, we can see that the marginal utility per dollar for hotdogs is highest when he consumes 2 hotdogs, and the marginal utility per dollar for soda is highest when he consumes 4 sodas. Therefore, the optimal combination for Marcus is 4 sodas and 2 hotdogs, which cost $10 (($4 x $1) + ($2 x $3) = $4 + $6 = $10).

The Following Table Shows the Marginal Benefit That Marcus Derives