Jamie's marginal utility for consuming muffins and doughnuts in utils are as follows.Jamie spends $4 for breakfast every morning,the price per muffin is $1.00 and the price per doughnut is $0.50. $$\begin{array} { | c | c | c | c | }
\hline \text { Muffin/Day } & \begin{array} { c }
\text { Marginal Utility } \
\text { per Muffin }
\end{array} & \text { Doughnut/Day } & \begin{array} { c }
\text { Marginal Utility } \
\text { per Doughnut }
\end{array} \
\hline 1 & 45 & 2 & 20 \
\hline 2 & 30 & 4 & 15 \
\hline 3 & 25 & 6 & 10 \
\hline
\end{array}$$
What is Jamie's optimal combination of muffins and doughnuts?
A) 1 muffin,6 doughnuts
B) 2 muffins,4 doughnuts
C) 3 muffins,2 doughnuts
D) 4 muffins,zero doughnuts

Question

Jamie's marginal utility for consuming muffins and doughnuts in utils are as follows.Jamie spends $4 for breakfast every morning,the price per muffin is $1.00 and the price per doughnut is $0.50. $$\begin{array} { | c | c | c | c | } 
\hline \text { Muffin/Day } & \begin{array} { c } 
\text { Marginal Utility } \
\text { per Muffin }
\end{array} & \text { Doughnut/Day } & \begin{array} { c } 
\text { Marginal Utility } \
\text { per Doughnut }
\end{array} \
\hline 1 & 45 & 2 & 20 \
\hline 2 & 30 & 4 & 15 \
\hline 3 & 25 & 6 & 10 \
\hline
\end{array}$$
What is Jamie's optimal combination of muffins and doughnuts?
A) 1 muffin,6 doughnuts
B) 2 muffins,4 doughnuts
C) 3 muffins,2 doughnuts
D) 4 muffins,zero doughnuts

Quizplus · Accepted Answer

To maximize utility, Jamie should equalize the marginal utility per dollar spent on muffins and doughnuts. For muffins, MU per dollar is 45, 30, 25 for 1, 2, 3 muffins respectively. For doughnuts, MU per dollar is 40, 30, 20 for 2, 4, 6 doughnuts respectively. The optimal combination is 2 muffins and 4 doughnuts, where the marginal utility per dollar is equalized at 30.

Jamie's Marginal Utility for Consuming Muffins and Doughnuts in Utils