4. A consumer uses all her available income to buy food and gasoline. Her indifference curveand budget constraint are shown in the diagram below. At point A, the marginal utility perdollar spent on food isthe marginal utility per dollar spent on gasoline.gasolineAICfooda. greater thanb. less thanc. equal to5. Megan is currently spending her entire candy budget. According to her preferences, youcould take away up to 5 candy bars if you give her 3 bags of sour patch kids withoutchanging her utility. The price of a candy bar is $0.75 and the price of a bag of sour patchkids is $1.50. Is Megan maximizing her utility? If not, how should she change herconsumption bundle?a. No, she should buy more candy bars and fewer bags of sour patch kids.b. No, she should buy more bags of sour patch kids and fewer candy bars.c. No, she should buy more bags of sour patch kids and more candy bars.d. No, she should buy fewer bags of sour patch kids and fewer candy bars.e. Yes, she is maximizing her utility.

Answer 4 OPTION C - EQUAL TO CONSUMER MAXIMIZE UTILITY when indifference curve tangent to budget. At…

4. A consumer uses all her available income to buy food and gasoline. Her indifference curve and budget constraint are shown in the diagram below. At point A, the marginal utility per dollar spent on food is the marginal utility per dollar spent on gasoline. soline IC

4. A consumer uses all her available income to buy food and gasoline. Her indifference curve and budget constraint are shown in the diagram below. At point A, the marginal utility per dollar spent on food is the marginal utility per dollar spent on gasoline. soline IC

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 8P

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