2 Assume the price of a candy bar is \( \$ 2 \) and the price of a bag of chips is \( \$ 3 \). Assume Lilly's marginal utility from consuming an additional candy bar is 10 utils and her marginal utility from consuming an additional bag of chips is 12 utils. If Lilly is spending her fixed weekly allowance on candy bars and bags of chips, which of the following actions will maximize Lilly's total utility?

To maximize Lilly's total utility, she should focus on the utility gained per dollar spent on each item. The marginal utility per dollar spent on the candy bar is calculated as \( \frac{10 \text{ utils}}{2 \text{ dollars}} = 5 \) utils per dollar, while the marginal utility per dollar spent on the bag of chips is calculated as \( \frac{12 \text{ utils}}{3 \text{ dollars}} = 4 \) utils per dollar. Since the candy bar provides more utility per dollar spent, Lilly should purchase more candy bars until the marginal utility per dollar equalizes with that of the bag of chips. After determining that candy bars yield a higher utility per dollar, Lilly should reallocate some of her spending from bags of chips to candy bars. This adjustment will allow her to maximize her total utility by getting the most satisfaction for her fixed allowance. However, she should keep an eye on the point at which the marginal utility per dollar between both treats is equal to ensure she maintains optimal consumption levels.