Refer to the data. If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing:
a. 2 units of J and 7 units of K.
b. 5 units of J and 5 units of K.
c. 4 units of J and 5 units of K.
d. 6 units of J and 3 units of K.

First of all to maximize utility means to get the most value from the available money, and in this case it means to buy the maximum amount of items J and K with 52 dollars.

Option C is for 4 units of J and 5 units of K

1 unit of J costs 8 dollars, therefore 4 units of J would cost 4×8=32 dollars.

1 unit of K costs 4 dollars, therefore 5 units of J would cost 5×4= 20 dollars.

The total cost of 4 units of J and 5 units of K would be equal to 32+20= 52 dollars.

From the calculations above we are able to but 4 units of J and 5 units of K with the 52 dollars and without having and change left or being in debt. This would mean we have maximized our utility.

If we were to buy 2 units of J and 7 units of K as I option A, we would have a total of 44 dollars which leaves us with a change of 8 dollars. We could still have bought one more of item J or 2 more of item K with the change. Therefore we would not have maximized our utility (the money) if we had done chosen A. The same applies if we go with options B and D, but in this case we would be spending more than what we have.

cecylya cecylya · Answer 2 · 2019-10-24T19:29:20+02:00

Answer:

The correct answer is c. 4 units of J and 5 units of K.

Step-by-step explanation:

To maximize the utility income we have to try to use most of the $52 buying J and K.

The equation is Utility= J *$8 + K * $4

a. 2 units of J and 7 units of K.

Utility= 2 *$8 + 7 * $4= 44 We have more money to spend.

b. 5 units of J and 5 units of K.

Utility= 5 *$8 + 5 * $4= 60 We don´t have enough money.

c. 4 units of J and 5 units of K.

Utility= 4 *$8 + 5 * $4= 52 maximize.

d. 6 units of J and 3 units of K.

Utility= 6 *$8 + 3 * $4= 60 We don´t have enough money.