-Refer to Table 6-1. What is Keegan's optimal consumption bundle?
A) 3 pita wraps and 3 bubble teas
B) 3 pita wraps and 4 bubble teas
C) 4 pita wraps and 2 bubble teas
D) 5 pita wraps and 0 bubble teas

Question

Quizplus · Accepted Answer

Keegan's optimal consumption bundle is where the marginal utility per dollar spent is equal for both goods. Looking at the table, the marginal utility per dollar spent for pita wraps is 3/2 and for bubble teas is 4/3. Therefore, Keegan should consume more bubble teas and less pita wraps until the marginal utility per dollar spent for both goods are equal. At 3 pita wraps and 4 bubble teas, the marginal utility per dollar spent for both goods is 4/3, making it Keegan's optimal consumption bundle.