Mary’s indifference map and budget constraint for goods X and Y are shown below. If Mary spends all her money on X and Y, which bundle will she choose to maximize her utility?**Graph Explanation:**- The graph features two axes: the vertical axis represents Good Y, and the horizontal axis represents Good X.- Three indifference curves are shown: $ u_1 $, $ u_2 $, and $ u_3 $, with $ u_3 $ representing the highest level of utility.- The budget constraint line is a downward-sloping straight line that represents all combinations of goods X and Y that Mary can afford.- There are five points labeled on the graph: A, B, C, D, and E, each representing a different bundle of goods X and Y.**Options:**- ○ C- ○ A- ○ E- ○ D- ○ BMary should choose the bundle at point **D** to maximize her utility, as it is the point where the highest indifference curve $ u_3 $ is tangent to the budget constraint, indicating the highest level of satisfaction within her budget.

Utility is the total satisfaction that the consumer derives from consumption of the goods and…

Answered: Mary's indifference map and budget…

Mary's indifference map and budget constraint for goods X and Y are shown below. If Mary spends all her money on X and Y, which bundle will she choose to maximize her utility? Good Y

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Mary’s indifference map and budget constraint for goods X and Y are shown below. If Mary spends all her money on X and Y, which bundle will she choose to maximize her utility?

**Graph Explanation:**

- The graph features two axes: the vertical axis represents Good Y, and the horizontal axis represents Good X.
- Three indifference curves are shown: $ u_1 $, $ u_2 $, and $ u_3 $, with $ u_3 $ representing the highest level of utility.
- The budget constraint line is a downward-sloping straight line that represents all combinations of goods X and Y that Mary can afford.
- There are five points labeled on the graph: A, B, C, D, and E, each representing a different bundle of goods X and Y.

**Options:**

- ○ C
- ○ A
- ○ E
- ○ D
- ○ B

Mary should choose the bundle at point **D** to maximize her utility, as it is the point where the highest indifference curve $ u_3 $ is tangent to the budget constraint, indicating the highest level of satisfaction within her budget.

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