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Wine and Cheese: Is Bridget making the utility-maximizing choice?

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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 the 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?

https://brainmass.com/economics/utility/marginal-utility-utility-maximizing-choice-343802

Solution Preview

For the wine, the marginal utility is 50 units and the price is \$10
Therefore, marginal utility per price = 50/10 = 5
For the cheese, the marginal utility is 40 units and the price is \$4
Therefore, marginal utility ...

Solution Summary

This solution provides calculations for marginal utility and discusses maximizing utility and what Bridget should do for optimal consumption.

\$2.49