Tom enjoys eating cookies and drinking milk, but he experiences diminishing marginal utility when consuming both of them. The accompanying table represents the marginal utility he gets from the first 5 units of each item. Cookies cost 50 cents each, whereas glasses of milk cost $1.00 each. $\begin{array}{rrr}\text { Cookies } & \text { Marginal } & \text { Ghsses of } & \text { Marginal } \
\text { Comsuned } & \text { Utility } & \text { Milk } & \text { Utility }\
0&- & 0 & - \
1&12 & 1 & 18 \
2&9 & 2 & 12 \
3&6 & 3 & 6 \
4&3 & 4 & 0 \
5&0 & 5 & -6
\end{array}$
a. If Tom has only $2.00, which combination of milk and cookies maximizes his utility?
b. If Tom's spending ability increases to $3.50, what combination of milk and cookies maximizes his utility?
c. If Tom does not have a budget constraint, what combination of milk and cookies maximizes his utility?

Question

Tom enjoys eating cookies and drinking milk, but he experiences diminishing marginal utility when consuming both of them. The accompanying table represents the marginal utility he gets from the first 5 units of each item. Cookies cost 50 cents each, whereas glasses of milk cost $1.00 each. $\begin{array}{rrr}\text { Cookies } & \text { Marginal } & \text { Ghsses of } & \text { Marginal } \
\text { Comsuned } & \text { Utility } & \text { Milk } & \text { Utility }\
0&- & 0 & - \
1&12 & 1 & 18 \
2&9 & 2 & 12 \
3&6 & 3 & 6 \
4&3 & 4 & 0 \
5&0 & 5 & -6
\end{array}$ 
a. If Tom has only $2.00, which combination of milk and cookies maximizes his utility?
b. If Tom's spending ability increases to $3.50, what combination of milk and cookies maximizes his utility?
c. If Tom does not have a budget constraint, what combination of milk and cookies maximizes his utility?

Quizplus · Accepted Answer

The Answer of Tom enjoys eating cookies and drinking milk, but he experiences diminishing marginal utility when consuming both of them. The accompanying table represents the marginal utility he gets from the first 5 units of each item. Cookies cost 50 cents each, whereas glasses of milk cost $1.00 each. $\begin{array}{rrr}\text { Cookies } & \text { Marginal } & \text { Ghsses of } & \text { Marginal } \
\text { Comsuned } & \text { Utility } & \text { Milk } & \text { Utility }\
0&- & 0 & - \
1&12 & 1 & 18 \
2&9 & 2 & 12 \
3&6 & 3 & 6 \
4&3 & 4 & 0 \
5&0 & 5 & -6
\end{array}$ 
a. If Tom has only $2.00, which combination of milk and cookies maximizes his utility?
b. If Tom's spending ability increases to $3.50, what combination of milk and cookies maximizes his utility?
c. If Tom does not have a budget constraint, what combination of milk and cookies maximizes his utility?

Tom Enjoys Eating Cookies and Drinking Milk, but He Experiences