The following table shows Mia's $ marginal utility for litres of soya milk:

-If the price of soya milk is $2 per litre,what is the maximum number of litres that Mia will buy?
A)1.
B)3.
C)4.
D)6.
E)7.

Question

The following table shows Mia's $ marginal utility for litres of soya milk:
 
-If the price of soya milk is $2 per litre,what is the maximum number of litres that Mia will buy?
A)1. 
B)3. 
C)4. 
D)6. 
E)7.

Quizplus · Accepted Answer

Mia will continue to buy soya milk as long as the marginal utility of the next litre is greater than or equal to the price (in this case, $2). From the table, we can see that the marginal utility of the 4th litre is 2, which is equal to the price. So, Mia will buy up to 4 litres. Beyond that point, the marginal utility drops below the price and Mia will not buy any more. Therefore, the best choice is to buy 4 litres, which gives her the maximum total utility.

The Following Table Shows Mia's $ Marginal Utility for Litres