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Figure: Coffee and Comic Books
-(Figure: Coffee and Comic Books) Refer to the figure. A consumer has $2 to spend on comic books (priced at $1 per comic book) and coffee (priced at $1 per cup). To maximize utility, should this consumer buy two cups of coffee?
A) Yes, buying two cups of coffee maximizes the consumer's total utility.
B) Yes, because the marginal utility of the second comic book is less than the marginal utility of the second cup of coffee.
C) No, the consumer should put back one cup of coffee (losing 16 utils) and replace it with a comic book (gaining 18 utils).
D) No, the consumer should buy two comic books to maximize utility.

Question

Use the following to answer questions:
Figure: Coffee and Comic Books 
-(Figure: Coffee and Comic Books) Refer to the figure. A consumer has $2 to spend on comic books (priced at $1 per comic book) and coffee (priced at $1 per cup). To maximize utility, should this consumer buy two cups of coffee?
A) Yes, buying two cups of coffee maximizes the consumer's total utility. 
B) Yes, because the marginal utility of the second comic book is less than the marginal utility of the second cup of coffee. 
C) No, the consumer should put back one cup of coffee (losing 16 utils) and replace it with a comic book (gaining 18 utils). 
D) No, the consumer should buy two comic books to maximize utility.

Quizplus · Accepted Answer

The marginal utility of the first cup of coffee is 20 utils while the marginal utility of the second cup is only 12 utils. The marginal utility of the first comic book is 18 utils while the marginal utility of the second comic book is also 18 utils. Therefore, the consumer should purchase one cup of coffee and one comic book to maximize total utility, as the total marginal utility of both is 38 utils (18+20), which is greater than the total marginal utility of two cups of coffee (32 utils).

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