The following graph shows the total utility obtained from rice crackers and beer by Carla.

-Refer to the above graph to answer this question.If the price of both rice crackers and beer are $2,and Carla has a budget of $14,how much of each will she purchase if she wishes to maximize her total utility?
A)3 crackers and 4 beers.
B)4 crackers and 3 beers.
C)5 crackers and 2 beers.
D)6 crackers and 1 beer.
E)7 crackers.

Question

The following graph shows the total utility obtained from rice crackers and beer by Carla.
 
-Refer to the above graph to answer this question.If the price of both rice crackers and beer are $2,and Carla has a budget of $14,how much of each will she purchase if she wishes to maximize her total utility?
A)3 crackers and 4 beers. 
B)4 crackers and 3 beers. 
C)5 crackers and 2 beers. 
D)6 crackers and 1 beer. 
E)7 crackers.

Quizplus · Accepted Answer

The point of maximum total utility is where the budget line (represented by the dotted line) is tangent to the highest possible indifference curve. In this case, that point is when Carla purchases 4 rice crackers and 3 beers, which costs a total of $14. At that point, she obtains a total utility of 44, which is the highest possible total utility given her budget and the prices of the goods.

The Following Graph Shows the Total Utility Obtained from Rice