Question

If a consumer purchases a combination of coffee and football tickets such that Coffee/Coffee = 20 and MU Football tickets/PFootball tickets = 10, to maximize utility, the consumer should by:_________
a. more coffee and more football tickets
b. less coffee and more football tickets
c. less coffee and fewer football tickets
d. more coffee and fewer football tickets

Answer 1

Answer: d. more coffee and fewer football tickets

Explanation:

MU/P refers to the marginal utility gained per dollar of an alternative and rationale consumers are always expected to maximise their utility by picking alternatives that give them more utility as opposed to less.

The MU/P for coffee is 20 whilst that of football tickets in 10. This means that more utility is gained from getting more coffee as opposed to football tickets. The action that would maximise utility would therefore be one where the consumer gets more coffee and fewer football tickets.