Work It Out, Chapter 10, Step 4

(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)

(Speaker)
This part of the problem is going to be similar to part C. But now the price of bagels has increased to four dollars.

(Description)
The left table from the first slide is briefly shown. The following text is briefly written above the table: The price of bagels increases to 4 dollars, but the price of coffee remains at 2 dollars per cup. Which bundle is her optimal bundle assuming she still has 8 dollars of income?

(Speaker)
Similar to before, we want to limit our bundles to those that cost exactly 8 dollars. For Brenda, this means she can choose between purchasing zero bagels and four cups of coffee, one bagel and two cups of coffee, or two bagels and no cups of coffee.

(Description)
The new table is shown. It is labeled as Consumption bundle. The table consists of 3 columns: Quantity of bagels, Quantity of coffee (cups), Total utility (utils). The table consists of 3 rows. The first row: Quantity of bagels is, 0, Quantity of coffee is, 4 cups, Total utility is, 40 utils. The second row: Quantity of bagels is, 1, Quantity of coffee is, 2 cups, Total utility is, 48 utils. The third row: Quantity of bagels is, 2, Quantity of coffee is, 0 cups, Total utility is, 28 utils. The following text is written above the table: We want to look at the bundles that lie on Brenda's budget constraint, this means eliminating all bundles that do not cost 8 dollars.

(Speaker)
Once we remove the bundles that are too expensive opr don't use her full budget, we can easily see Brenda's utility is maximized by consuming one bagel and two cups of coffee.

(Description)
The corresponding data in the second row of the table is highlighted. This row is labeled as A bundle of 1 bagels and 2 cups of coffee gives Brenda the highest total utility after the price of bagels increases to 4 dollars.

(Speaker)
At this point, she will have 48 utils of utility.