Figure 21-11
-Refer to Figure 21-11.Assume that the consumer depicted in the figure has an income of $80.If the price of chocolate chips is $4 and the price of marshmallows is $4,the optimizing consumer would choose to purchase
A) 9 marshmallows and 6 chocolate chips.
B) 10 marshmallows and 10 chocolate chips.
C) 5 marshmallows and 5 chocolate chips.
D) 3 marshmallows and 9 chocolate chips.

Question

Figure 21-11 
-Refer to Figure 21-11.Assume that the consumer depicted in the figure has an income of $80.If the price of chocolate chips is $4 and the price of marshmallows is $4,the optimizing consumer would choose to purchase
A) 9 marshmallows and 6 chocolate chips. 
B) 10 marshmallows and 10 chocolate chips. 
C) 5 marshmallows and 5 chocolate chips. 
D) 3 marshmallows and 9 chocolate chips.

Quizplus · Accepted Answer

The consumer's budget constraint is represented by the line that connects point A and B in the figure. At the intersection of this line and the highest indifference curve (indifference curve 3), the consumer's utility is maximized. This occurs at point C, where the consumer purchases 10 marshmallows and 10 chocolate chips. This combination costs $80 ($4 per marshmallow and per chocolate chip, for a total of $40 for each), which is the consumer's entire budget. Therefore, choice B is the best option for the consumer to maximize their utility given their income and the prices of chocolate chips and marshmallows.

Figure 21-11 -Refer to Figure 21-11.Assume That the Consumer Depicted in the Depicted