Suppose a man has a budget of $6 and donuts and ice cream sandwiches cost $1 each. According to...

Question:

Suppose a man has a budget of $6 and donuts and ice cream sandwiches cost $1 each. According to the table, what is the consumer optimum?

Number of donuts Total Utility of donuts Marginal Utility of donuts Number of ice cram sandwiches Total Utility of ice cream sandwiches Marginal Utility of ice cream sandwiches
0 0 - 0 0 -
1 10 10 1 8 8
2 19 9 2 15 7
3 26 7 3 21 6
4 30 4 4 25 4
5 30 0 5 27 2
6 29 -1 6 27 0

_____ donuts

_____ ice cream sandwiches

Maximizing Utility

Economics is all about making good choices under conditions of scarce resources. Finding the best option is a matter of maximizing utility: a phrase that economists use to quantify satisfaction or happiness.

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Assuming that the man wants to spend his entire budget of $6 on either donuts or ice cream sandwiches, his two best options are to purchase 3 of each...

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Utility Maximization: Budget Constraints & Consumer Choice

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Chapter 3 / Lesson 2
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Learn about utility maximization. Discover various types of utility, examine utility maximizing rules, and study examples of maximizing utilities in economics.


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