Wilbur consumes two goods,bacon and eggs.He has maximized his utility given his income.Eggs costs $2 per dozen,and he consumes them to the point where the marginal utility he receives is 6.Bacon cost $4 per serving,and the relationship between the marginal utility that Wilbur gets from eating bacon and the number of servings he eats per month is as follows:

How many servings of bacon does Wilbur buy each month?
A) 1
B) 2
C) 3
D) 4

Question

Wilbur consumes two goods,bacon and eggs.He has maximized his utility given his income.Eggs costs $2 per dozen,and he consumes them to the point where the marginal utility he receives is 6.Bacon cost $4 per serving,and the relationship between the marginal utility that Wilbur gets from eating bacon and the number of servings he eats per month is as follows:

How many servings of bacon does Wilbur buy each month?

How many servings of bacon does Wilbur buy each month?
A) 1 
B) 2 
C) 3 
D) 4

Quizplus · Accepted Answer

To find out how many servings of bacon Wilbur buys each month, we need to look at the point where the marginal utility from consuming bacon equals its price. From the graph, we can see that this occurs at around 3 servings of bacon per month, where the marginal utility is approximately 9 and the price is $4. At this point, Wilbur is getting the most satisfaction (utility) from the money he is spending on bacon.

The best choice for Wilbur would be to continue consuming 3 servings of bacon per month and also continue consuming eggs until the marginal utility of eggs reaches $2 (assuming he has no other options for spending his income). In other words, he should continue optimizing his consumption of both goods based on their marginal utility and price.

Wilbur Consumes Two Goods,bacon and Eggs