A child is given $4.80 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents andhard candies $1.20 each. The marginal utilities derived from each product are as shown in the following table.Number of Items MU of Chocolates MU of Hard Candies12345678605040302010515014012010080705020Which combination would give the child the maximum utility out of spending $4.80?6 chocolates and 2 hard candies8 chocolates and 0 hard candies3 chocolates and 3 hard candies0 chocolates and 4 hard candies

Utility means satisfaction. The utility is maximum where the marginal utility per dollar of one good…

Which combination would give the child the maximum utility out of spending $4.80? 6 chocolates and 2 hard candies 8 chocolates and 0 hard candies 3 chocolates and 3 hard candies 0 chocolates and 4 hard candies

Which combination would give the child the maximum utility out of spending $4.80? 6 chocolates and 2 hard candies 8 chocolates and 0 hard candies 3 chocolates and 3 hard candies 0 chocolates and 4 hard candies

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

A child is given $4.80 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and
hard candies $1.20 each. The marginal utilities derived from each product are as shown in the following table.
Number of Items MU of Chocolates MU of Hard Candies
1
2
3
4
5
6
7
8
60
50
40
30
20
10
5
150
140
120
100
80
70
50
20
Which combination would give the child the maximum utility out of spending $4.80?
6 chocolates and 2 hard candies
8 chocolates and 0 hard candies
3 chocolates and 3 hard candies
0 chocolates and 4 hard candies

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