The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

-Mr. Max is about to purchase 4 units of good A and 6 units of good B. The price of both A and B is $2. Mr. Max has only $20 to spend. If the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 12, then:
A)he should not buy anything.
B)he should buy more of A and less of B.
C)he should buy less of A and more of B.
D)he should buy A and B in the quantities indicated.
E)he should buy more of A and little more than that of B.

Question

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3
 
-Mr. Max is about to purchase 4 units of good A and 6 units of good B. The price of both A and B is $2. Mr. Max has only $20 to spend. If the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 12, then:
A)he should not buy anything. 
B)he should buy more of A and less of B. 
C)he should buy less of A and more of B. 
D)he should buy A and B in the quantities indicated. 
E)he should buy more of A and little more than that of B.

Quizplus · Accepted Answer

According to the table, the total utility obtained from 4 units of A and 6 units of B is 60 utils (30+30). The total cost of purchasing 4 units of A and 6 units of B at a price of $2 per unit is $20.

Since the marginal utility of the fourth unit of A and the sixth unit of B is 12, it means that the additional satisfaction gained from consuming one extra unit of A or B is still high.

Therefore, Mr. Max should buy 4 units of A and 6 units of B to maximize his utility within his budget.

The Below Table Shows the Average Utility (In Utils) Obtained