Yvette lives in Dallas and loves to eat desserts. She spends her entire weekly allowance on jello and pie. A bowl of jello is priced at $1.25, and a piece of apple pie is priced at $3.75. At her current consumption point, Yvette's marginal rate of substitution (MRS) of jello for pie is 3. This means that Yvette is willing to trade three bowls of jello per week for one piece of pie per week. Does Yvette's current bundle maximize her utility—in other words, make her as well off as possible? If not, how should she change it to maximize her utility?

Yvette could increase her utility by buying more pudding and less pie per week.
Yvette's current bundle maximizes his utility, and she should keep it unchanged.
Yvette could increase her utility by buying less pudding and more pie per week.

To solve this question, we need to remember the rule at which a consumer maximizes utility. This is the marginal rate of substitution should be equal to the price ratio:

[tex]MRS=\frac{Price\, of\, pie}{Price\, of\, jello}[/tex]

From the problem we know that MRS=3 we need to calculate the price ratio

[tex]\frac{Price\, of\, pie}{Price\, of\, jello}=\frac{3.75}{1.25}=3[/tex]

We can see that the MRS is equal to price ratio. So Yvette is maximizing utility