October 5, 2015

Homework Help: Economics

Posted by Taralee on Wednesday, April 20, 2011 at 6:41pm.

Bridget has a limited income and consumers 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?

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