Alexandra consumes only caviar and champagne,but she does have a limited income of $400.Her current consumption choice is 5 ounces of caviar,at a price of $50 per ounce,and 6 bottles of champagne,at $25 each.The last ounce of caviar added 100 units to Alexandra's total utility,while the last bottle of champagne added 75 units.If Alexandra chooses 4 ounces of caviar and 8 bottles of champagne instead her total utility will:
A)increase by 150 units
B)decrease by 150 units
C)increase by 100 units
D)decrease by 100 units
E)increase by 50 units

Question

Quizplus · Accepted Answer

Switching from 5 ounces of caviar and 6 bottles of champagne to 4 ounces of caviar and 8 bottles of champagne, Alexandra loses 100 units of utility from consuming one less ounce of caviar but gains 150 units of utility from consuming two more bottles of champagne (75 units each). The net change is an increase of 50 units in total utility.

Alexandra Consumes Only Caviar and Champagne,but She Does Have a Limited