Refer to the following table to answer the following questions:

-Assume that chips cost $1 and soda costs $2.If the consumer has $7,the combination of goods that would maximize her utility per dollar and remain within her budget would be
A) 0 chips and 4 sodas.
B) 6 chips and 5 sodas.
C) 5 chips and 1 soda.
D) 4 chips and 2 sodas.
E) 2 chips and 3 sodas.

Question

Refer to the following table to answer the following questions:
 
-Assume that chips cost $1 and soda costs $2.If the consumer has $7,the combination of goods that would maximize her utility per dollar and remain within her budget would be
A) 0 chips and 4 sodas. 
B) 6 chips and 5 sodas. 
C) 5 chips and 1 soda. 
D) 4 chips and 2 sodas. 
E) 2 chips and 3 sodas.

Quizplus · Accepted Answer

The table shows the marginal utility per dollar for chips and sodas. To maximize utility per dollar, the consumer should choose the good with the highest marginal utility per dollar until the budget constraint is reached. Starting with a budget of $7, the consumer can buy 3 sodas for $6, leaving $1 for chips. Therefore, the best choice is 5 chips and 1 soda.

Refer to the Following Table to Answer the Following Questions