-The above table shows Tammy's total utility from streaming videos and CDs. If Tammy has $70 to spend on videos and CDs and if the price of a streamed video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing
A) 3 CDs and 1 video.
B) 1 CD and 5 videos.
C) 2 CDs and 3 videos.
D) none of the above.

Question

-The above table shows Tammy's total utility from streaming videos and CDs. If Tammy has $70 to spend on videos and CDs and if the price of a streamed video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing
A) 3 CDs and 1 video. 
B) 1 CD and 5 videos. 
C) 2 CDs and 3 videos. 
D) none of the above.

Quizplus · Accepted Answer

Tammy maximizes her utility by purchasing 2 CDs and 3 videos, spending exactly $70 ($20*2 + $10*3), which fits her budget.

-The Above Table Shows Tammy's Total Utility from Streaming Videos