Amy lives in Detroit and loves to eat desserts. She spends her entire weekly allowance on yogurt and pie. A bowl of yogurt is priced at $1.75, and a piece of pumpkin pie is priced at $7.00. At her current consumption point, Amy's marginal rate of substitution (MRS) of yogurt for pie is 5. This means that Amy is willing to trade five bowls of yogurt per week for one piece of pie per week. Does Amy's current bundle maximize her utility—in other words, make her as well off as possible? If not, how should she change it to maximize her utility? A. Amy's current bundle maximizes her utility, and she should keep it unchanged.
Amy lives in Detroit and loves to eat desserts. She spends her entire weekly allowance on yogurt and pie. A bowl of yogurt is priced at $1.75, and a piece of pumpkin pie is priced at $7.00. At her current consumption point, Amy's marginal rate of substitution (MRS) of yogurt for pie is 5. This means that Amy is willing to trade five bowls of yogurt per week for one piece of pie per week. Does Amy's current bundle maximize her utility—in other words, make her as well off as possible? If not, how should she change it to maximize her utility? A. Amy's current bundle maximizes her utility, and she should keep it unchanged.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
ChapterP2: Microeconomics Fundamentals
Section: Chapter Questions
Problem 12KC
Related questions
Question
Amy lives in Detroit and loves to eat desserts. She spends her entire weekly allowance on yogurt and pie. A bowl of yogurt is priced at $1.75, and a piece of pumpkin pie is priced at $7.00. At her current consumption point, Amy's marginal rate of substitution (MRS) of yogurt for pie is 5. This means that Amy is willing to trade five bowls of yogurt per week for one piece of pie per week.
Does Amy's current bundle maximize her utility—in other words, make her as well off as possible? If not, how should she change it to maximize her utility?
A. Amy's current bundle maximizes her utility, and she should keep it unchanged.
B. Amy could increase her utility by buying more yogurt and less pie per week.
C. Amy could increase her utility by buying less yogurt and more pie per week.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
![Microeconomics](https://www.bartleby.com/isbn_cover_images/9781337617406/9781337617406_smallCoverImage.gif)