Bridget has a limited income and consumes only wine and cheese; her current consumption choice is four bottles of wine and 10 pounds of cheese. The price of wine is $ 10 per bottle, and the price of cheese is $ 4 per pound. The last bottle of wine added 50 units to Bridget’s utility, while the last pound of cheese added 40 units. a. Is Bridget making the utility- maximizing choice? Why or why not? b. If not, what should she do instead? Why?

To determine if Bridget is making the utility-maximizing choice, we need to compare the marginal utilities per dollar of her current consumption bundle.

a. To start, let's calculate the marginal utility per dollar for wine and cheese:

Marginal Utility per Dollar of Wine = Marginal Utility of Wine / Price of Wine
Marginal Utility per Dollar of Wine = 50 units / $10 per bottle
Marginal Utility per Dollar of Wine = 5 units per dollar

Marginal Utility per Dollar of Cheese = Marginal Utility of Cheese / Price of Cheese
Marginal Utility per Dollar of Cheese = 40 units / $4 per pound
Marginal Utility per Dollar of Cheese = 10 units per dollar

Since the marginal utility per dollar of cheese (10 units per dollar) is higher than the marginal utility per dollar of wine (5 units per dollar), Bridget is not currently making the utility-maximizing choice.

b. To maximize her utility, Bridget should reallocate some of her income from wine to cheese since the marginal utility per dollar is higher for cheese.

She should continue reallocating until the marginal utility per dollar is equal for both goods. In other words, she should allocate her limited income in such a way that the last dollar spent on wine gives the same utility as the last dollar spent on cheese.

By reallocating the income, Bridget can increase her overall utility and achieve a utility-maximizing choice.