Question

rohans 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 10 cents per ounce and cashews cost 25 cents per ounce, is rohan maximizing his total utility from the kinds of nuts? instructions: enter your responses as whole numbers. at current levels of peanut consumption, rohan receives: utils per dollar. at current levels of cashew consumption, rohan receives: utils per dollar. therefore, rohan (click to select) maximizing his total utility because $mu_p/p_p$ is (click to select) $mu_c/p_c$.

Explanation:

Step1: Calculate utils per dollar for peanuts

The formula for utils per dollar is $\frac{MU}{P}$. For peanuts, $MU_p = 100$ utils per ounce and $P_p=0.1$ dollars per ounce. So, $\frac{MU_p}{P_p}=\frac{100}{0.1}=1000$ utils per dollar.

Step2: Calculate utils per dollar for cashews

For cashews, $MU_c = 200$ utils per ounce and $P_c = 0.25$ dollars per ounce. So, $\frac{MU_c}{P_c}=\frac{200}{0.25}=800$ utils per dollar.

Step3: Check if total - utility is maximized

A consumer maximizes total utility when $\frac{MU_1}{P_1}=\frac{MU_2}{P_2}$. Here, $\frac{MU_p}{P_p}=1000$ and $\frac{MU_c}{P_c}=800$, so $\frac{MU_p}{P_p}
eq\frac{MU_c}{P_c}$, and Rohan is not maximizing his total utility.

Answer:

At current levels of peanut consumption, Rohan receives: 1000 utils per dollar.
At current levels of cashew consumption, Rohan receives: 800 utils per dollar.
Therefore, Rohan is not maximizing his total utility because $MU_p/P_p$ is greater than $MU_c/P_c$.