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Fred Consumes Quantities of Butter and Margarine; His Utility Function

Question 31

Multiple Choice

Fred consumes quantities of butter and margarine; his utility function is given by U = 5M + 2B.If Fred has $10 to spend on butter and margarine,and if butter costs $2 per pound and margarine costs $1 per pound,what is his optimal bundle of butter and margarine?


A) 3 butter and 4 margarine.
B) 5 butter and 0 margarine.
C) 0 butter and 10 margarine.
D) 2 butter and 6 margarine.
E) None of the above.

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