The Analysis of Consumer Choice

1. He is spending $4.50 (= $0.75 × 6) on potato chips and $3.50 (= $0.50 × 7) on candy bars, for a total of $8. His budget constraint is $8.
2. In order for the ratios of marginal utility to price to be equal, the marginal utility of a candy bar must be 4. Let the marginal utility and price of candy bars be MU_B and P_B, respectively, and the marginal utility and price of a bag of potato chips be MU_C and P_C, respectively. Then we want

$\frac{MU_C}{P_C} = \frac{MU_B}{P_B}$

We know that P_C is $0.75 and P_B equals $0.50. We are told that MU_C is 6. Thus

$\frac{6}{0.75} = \frac{MU_B}{0.50}$

Solving the equation for MU_B, we find that it must equal 4.