Answer the question on the basis of the following total utility data for products L and M.Assume that the prices of L and M are $3 and $4 respectively and that the consumer's income is $18. $\begin{array}{l}
\begin{array}{ccc}
\text { Units}&\text{ Total }\
\text { of L } & \text { Utility } \
\hline
1 & 9 \
2 & 15 \
3 & 18 \
4 & 20 \
5 & 21
\end{array}
\begin{array}{ccc}
\begin{array}{c}
\text { Units } \
\text { of M }\
\hline
\end{array} & \begin{array}{c}
\text { Total } \
\text { Utility }\
\hline
\end{array} \
1 & 16 \
2 & 28 \
3 & 36 \
4 & 40 \
5 & 42
\end{array}
\end{array}$ Refer to the data.How many units of the two products will the rational consumer purchase?
A) 3 of L and none of M
B) 4 of L and 2 of M
C) 3 of L and 5 of M
D) 2 of L and 3 of M

Question

Answer the question on the basis of the following total utility data for products L and M.Assume that the prices of L and M are $3 and $4 respectively and that the consumer's income is $18. $\begin{array}{l}
\begin{array}{ccc}
\text { Units}&\text{ Total }\
\text { of L } &  \text { Utility } \
\hline
1 & 9 \
2 & 15 \
3 & 18 \
4 & 20 \
5 & 21
\end{array}
\begin{array}{ccc}
\begin{array}{c}
\text { Units } \
\text { of M }\
\hline
\end{array} &  \begin{array}{c}
\text { Total } \
\text { Utility }\
\hline
\end{array} \
1 & 16 \
2 & 28 \
3 & 36 \
4 & 40 \
5 & 42
\end{array}
\end{array}$ Refer to the data.How many units of the two products will the rational consumer purchase?
A) 3 of L and none of M
B) 4 of L and 2 of M
C) 3 of L and 5 of M
D) 2 of L and 3 of M

Quizplus · Accepted Answer

To maximize utility within the budget constraint of $18, we calculate the marginal utility per dollar for each option and choose the combination that maximizes total utility without exceeding the budget. For L, the marginal utility per dollar decreases as more units are purchased, and for M, it also decreases but starts at a higher utility value. By comparing the utility gained per dollar spent, we find that purchasing 2 units of L ($3 each, total $6) and 3 units of M ($4 each, total $12) uses the entire budget of $18 and maximizes utility based on the given data.

Answer the Question on the Basis of the Following Total