Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit.
Refer to Table 19.3.Suppose Michael has $28 to spend on cola and pretzels.What combination should he purchase in order to maximize his utility?
A)Three colas and four pretzels.
B)One cola and five pretzels.
C)Three colas and one pretzel.
D)Two colas and three pretzels.

Question

Complete Table 19.3 below.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit.
 Refer to Table 19.3.Suppose Michael has $28 to spend on cola and pretzels.What combination should he purchase in order to maximize his utility?
A)Three colas and four pretzels. 
B)One cola and five pretzels. 
C)Three colas and one pretzel. 
D)Two colas and three pretzels.

Quizplus · Accepted Answer

We can calculate the total utility for each combination to determine the best choice for Michael.

- Three colas and four pretzels: 
Total utility = (3*10) + (4*8) = 42

- One cola and five pretzels: 
Total utility = (1*10) + (5*8) = 50

- Three colas and one pretzel: 
Total utility = (3*10) + (1*4) = 34

- Two colas and three pretzels: 
Total utility = (2*10) + (3*8) = 44

Therefore, the best choice for Michael is option D, which is purchasing two colas and three pretzels, as it gives the highest total utility of 44.