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Douglas allocates his budget of $24 per week to 3 goods, cereal, books and clothing. Use the table below to answer the following question Quantity

  • Douglas allocates his budget of $24 per week to 3 goods, cereal, books and clothing. Use the table below to answer the following question
Quantity Total Utility of Cereal Total Utility of Books Total Utility of Clothing
1 50 75 25
2 90 135 45
3 120 175 60
4 140 205 70
5 155 225 78
  • If the price of cereal is $2, the price of books is $3 and the price of clothing is $1, at what point does Douglas maximize his utility? Explain.

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