0022kom 1509743065295 04AA6804015F1989FLAF19OE0000 Robert enjoys consuming both

Question

0022kom 1509743065295 04AA6804015F1989FLAF19OE0000 Robert enjoys consuming both sode and coffee. Each can of soca costs $1, and each oup of coffee costs $2 Currenty, he buys 200 cans of sode and 300 cups of coffee oer year. The following graphs show his marginal uciity curves for soda (MUg) and coffee (MUb). You can see that at his current consumption ievel, Rebert's marginal ueity hom coraumng the last can of sode he bought 1s 12 uns per can, and his margin-utlity rrem eonsuming tbe last cup of coffee he boughe is 12 utis per cup MU OF COFFEE per ou SODA ICans per yearl COFFEE ICups per year Is Robert curnently maximizing his utity? O Yes; the marginal utity he receives from his last can of soda equals that of his last cup of coffee. No; he could buy more coffee and less soda, not spend any more money, and be better off O No; he ikes coffee and soda more than other goods, so he should buy more of both. O No; he could buy less coffee and more soda, not spend any more money, and be better off cakculate the marginal utility per dollar from the last can of For each of the following combinations of sode and coffee, soda and the last cup of coffee. Soda Coffee Combination Cans per Year MUs/Ps Cups per Year MUc/P 300 500 300 Which of the combinations l isted in the table given satisfy the condition for utlity maximizaton? Check all that apply. Combinator, B Combination C Combination A

Explanation / Answer

1. the correct option is D, because the marginal utility per dollar is more for soda than for coffee. So he should buy mor of soda.

2. The correct option is combination C because at D the Marginal utility per dollar is equal for both soda and coffee which is the condition for utility maximization.

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