Table 10-1

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 10-1 shows his total utility from different quantities of the two items.
-Refer to Table 10-1.If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume?
A)4 glasses
B)5 glasses
C)6 glasses
D)7 glasses

Question

Table 10-1
  
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 10-1 shows his total utility from different quantities of the two items.
-Refer to Table 10-1.If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume?
A)4 glasses 
B)5 glasses 
C)6 glasses 
D)7 glasses

Quizplus · Accepted Answer

Keegan's total utility from each Pita Wrap (PW) and Bubble Tea (BT) combination is given in the table. If Keegan can drink all the bubble tea he wants for free, his cost will be solely determined by his consumption of Pita Wraps. 
With $30, Keegan can afford 5 Pita Wraps ($6 each). His total utility will be highest at this quantity combination, which is 138. The table shows that Keegan's utility from Pita Wraps decreases from 30 to 18 as his consumption increases from 1 to 5, while his utility from Bubble Tea remains constant at 18. Therefore, the optimal choice for Keegan is to consume 5 Pita Wraps and drink as much Bubble Tea as he wants, so he will consume 6 glasses of Bubble Tea.

Table 10-1 Keegan Has $30 to Spend on Pita Wraps and Bubble