The following table shows Pierre's utility for bagels and cider.

-Refer to the above information to answer this question.If Pierre has a budget of $12 and the price of both bagels and cider are $2,what will be his optimal purchase?
A)1 bagel and 5 ciders.
B)2 bagels and 4 ciders.
C)3 bagels and 3 ciders.
D)4 bagels and 2 ciders.
E)5 bagels and 1 ciders.

Question

The following table shows Pierre's utility for bagels and cider.
 
-Refer to the above information to answer this question.If Pierre has a budget of $12 and the price of both bagels and cider are $2,what will be his optimal purchase?
A)1 bagel and 5 ciders. 
B)2 bagels and 4 ciders. 
C)3 bagels and 3 ciders. 
D)4 bagels and 2 ciders. 
E)5 bagels and 1 ciders.

Quizplus · Accepted Answer

Given the budget of $12 and the price of both items being $2, the optimal purchase would involve maximizing the quantity of items bought while staying within budget. Option B, 2 bagels and 4 ciders, totals $12 (2*$2 + 4*$2 = $12), fully utilizing the budget.

The Following Table Shows Pierre's Utility for Bagels and Cider