Reference no: EM133519282

Question

Suppose your classmate Brian loves to eat dessert-so much so that he allocates his entire weekly budget to apple crisp and pie. The price of one bowl of apple crisp is $1.25, and the price of a piece of blueberry pie is $3.75. At his current level of consumption, Brian's marginal rate of substitution (MRS) of apple crisp for pie is 4. In other words, Brian is willing to sacrifice four bowls of apple crisp for one piece of pie per week.

Does Brian's current consumption bundle maximize his utility? That is, does it make him as well off as possible? If not, how should he change it to maximize his utility?

Brian could increase his utility by buying more apple crisp and less pie per week.

Brian's current bundle maximizes his utility, and he should keep it unchanged.

Brian could increase his utility by buying less apple crisp and more pie per week.