Table 7-1
$\begin{array}{|c|c|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { Pita Wraps }
\end{array} & \text { Total Utility } & \begin{array}{c}
\text { Quantity of } \
\text { Bubble Tea }
\end{array} & \text { Total Utility } \
\hline 1 & 60 & 1 & 40 \
\hline 2 & 102 & 2 & 70 \
\hline 3 & 132 & 3 & 91 \
\hline 4 & 144 & 4 & 106 \
\hline 5 & 144 & 5 & 112 \
\hline 6 & 138 & 6 & 115 \
\hline 7 & 128 & 7 & 115 \
\hline
\end{array}$ Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items.
-Refer to Table 7-1.What is Keegan's optimal consumption bundle?
A) 3 pita wraps and 3 bubble teas
B) 3 pita wraps and 4 bubble teas
C) 4 pita wraps and 2 bubble teas
D) 5 pita wraps and 0 bubble teas

Question

Table 7-1
 $\begin{array}{|c|c|c|c|}
\hline \begin{array}{c}
\text { Quantity of } \
\text { Pita Wraps }
\end{array} & \text { Total Utility } & \begin{array}{c}
\text { Quantity of } \
\text { Bubble Tea }
\end{array} & \text { Total Utility } \
\hline 1 & 60 & 1 & 40 \
\hline 2 & 102 & 2 & 70 \
\hline 3 & 132 & 3 & 91 \
\hline 4 & 144 & 4 & 106 \
\hline 5 & 144 & 5 & 112 \
\hline 6 & 138 & 6 & 115 \
\hline 7 & 128 & 7 & 115 \
\hline
\end{array}$ Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items.
-Refer to Table 7-1.What is Keegan's optimal consumption bundle?
A) 3 pita wraps and 3 bubble teas
B) 3 pita wraps and 4 bubble teas
C) 4 pita wraps and 2 bubble teas
D) 5 pita wraps and 0 bubble teas

Quizplus · Accepted Answer

To determine Keegan's optimal consumption bundle, we need to compare the marginal utility per dollar spent on each item. The marginal utility per dollar spent on Pita Wraps is 10 (60/6 for the first wrap, 42/6 for the second wrap, etc.), while the marginal utility per dollar spent on Bubble Tea is 23.3 (40/3 for the first bubble tea, 30/3 for the second bubble tea, etc.). 
Therefore, Keegan should buy more of the item with the higher marginal utility per dollar spent, which is Bubble Tea. 
To spend his entire $30 budget, Keegan could buy 3 Pita Wraps (for a total cost of $18) and 4 Bubble Teas (for a total cost of $12), which would give him a total utility of 102 + 112 = 214.

Table 7-1 Keegan Has $30 to Spend on Pita Wraps and Bubble