A Child Is Given $4

question 95

Multiple Choice

A child is given $4.00 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Which combination would give the child the maximum utility out of spending $4?

• A)6 chocolates and 2 hard candies
• B)4 chocolates and 3 hard candies
• C)2 chocolates and 4 hard candies
• D)0 chocolates and 5 hard candies

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Definitions:

Decimal

A number system based on ten, involving numbers with fractions represented by digits following a period.

Smaller

Referring to an object of lesser size or amount compared to another.

Multiply

A mathematical operation where a number is added to itself a certain number of times, equivalent to repeated addition.

Greater

A term used to indicate a larger amount, size, degree, or importance in comparison with something else.