Question

Toby's current marginal utility from consuming peanuts is 100 utils per ounce and his marginal utility from consuming cashews is 200 utils per ounce. if peanuts cost $0.10 per ounce and cashews cost $0.50 per ounce, is toby maximizing his total utility from the kinds of nuts?

Answer 1

Toby would maximize his total utility by buying more peanuts because his marginal utility per ounce is greater than that of cashews.