Cole is about to purchase 4 units of good A and 6 units of good B. The price of both A and B is $2. Cole has only $20 to spend. Assume that the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 8. If Cole wants to maximize utility subject to his budget constraints
[A] he should buy more of A and less of B.
[B] Impossible to determine from information given
[C] he should buy less of A and more of B.
[D] he should not buy anything.
[E] he should buy A and B in the quantities indicated.

Question

Cole is about to purchase 4 units of good A and 6 units of good B. The price of both A and B is $2. Cole has only $20 to spend. Assume that the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 8.   If Cole wants to maximize utility subject to his budget constraints
[A] he should buy more of A and less of B.
[B] Impossible to determine from information given
[C] he should buy less of A and more of B.
[D] he should not buy anything.
[E] he should buy A and B in the quantities indicated.

anonymous · Answer

Cole's marginal utility on the next purchase is higher for A, so Cole's next purchase should be?