Astrid currently consumes only milk and honey. She drinks four quarts of milk pr

Question

Astrid currently consumes only milk and honey. She drinks four quarts of milk priced at $3 per quart and gets 30 utils for the last quart. She consumes thirteen jars of honey at a price of $0.75 per jar and gets 7.5 utils for the last jar. Is Astrid maximizing her utility?

A) No. She should consume more milk

B) No. She should consume more honey.

C) No. She should consume less milk.

D. Yes.

Astrid currently consumes only milk and honey. She drinks four quarts of milk priced at $3 per quart and gets 30 utils for the last quart. She consumes thirteen jars of honey at a price of $0.75 per jar and gets 7.5 utils for the last jar. Is Astrid maximizing her utility?

A) No. She should consume more milk

B) No. She should consume more honey.

C) No. She should consume less milk.

D. Yes.

Explanation / Answer

Ans:

Option D - Yes

The utility gained by milk per dollar is 30 / 3 = 10 utils

The utility gained by milk for $0.75 is (30 / 3) * 0.75 = 7.5 utils

The utility gained for thirteen jars of honey is 7.5 utils

Since the utility is same for the last quart and last jar in terms of dollars spent , Astrid maximizing her utility.

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