Marginal rate of substitution of pudding for pie

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Eric lives in Chicago and loves to eat desserts. He spends his entire weekly allowance on pudding and pie. A bowl of pudding is priced at $1.75, and a piece of apple pie is priced at $7.00. At his current consumption point, Eric's marginal rate of substitution (MRS) of pudding for pie is 5. This means that Eric is willing to trade five bowls of pudding per week for one piece of pie per week.

Does Eric's current bundle maximize his utility in other words, make him as well off as possible? If not, how should he change it to maximize his utility?

___Eric could increase his utility by buying less pudding and more pie per week.

___Eric's current bundle maximizes his utility, and he should keep it unchanged.

___Eric could increase his utility by buying more pudding and less pie per week.

Reference no: EM13834043

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