Cho enjoys consuming both soda and coffee. Each can of soda costsP

S

=$1

P

S

=

$1

, and each cup of coffee costsP

C

=$2

P

C

=

$2

. Suppose that Cho buys 75 cans of soda and 50 cups of coffee per month. The following graphs show her marginal utility curves for soda and coffee. At her current consumption level, Cho's marginal utility from consuming the last can of soda she bought isMU

S

=12

MU

S

=

12

utils per can, and her marginal utility from consuming the last cup of coffee she bought isMU

C

=12

MU

C

=

12

utils per cup.

0

25

50

75

100

125

150

24

20

16

12

8

4

0

MU OF SODA (Utils per can)

SODA (Cans per month)

0

25

50

75

100

125

150

24

20

16

12

8

4

0

MU OF COFFEE (Utils per cup)

COFFEE (Cups per month)

Is Cho currently maximizing her utility?

No; she could buy more coffee and less soda, not spend any more money, and be better off.

No; she could buy less coffee and more soda, not spend any more money, and be better off.

No; she likes coffee and soda more than other goods, so she should buy more of both.

Yes; the marginal utility she receives from her last can of soda equals that of her last cup of coffee.

For each of the following combinations of soda and coffee, calculate the marginal utility per dollar from the last can of soda and the last cup of coffee. Then, use the dropdown menus in the last column to indicate which of the combinations satisfy the condition for consumer equilibrium.

CombinationSoda

Coffee

Consumer Equilibrium?(Cans per Month)MU

S

P

S

MU

S

P

S

(Cups per Month)MU

C

P

C

MU

C

P

C

A100100 B7550 C125100 D2525 Suppose Cho has a "caffeine budget" of $395 per month, which she spends on soda and coffee. To maximize her utility, Cho will purchasecans of soda andcups of coffee per month.