Suppose a man has a budget of $6 and donuts and ice cream sandwiches cost $1 each. According to the table, what is the consumer optimum?
|Number of donuts||Total Utility of donuts||Marginal Utility of donuts||Number of ice cram sandwiches||Total Utility of ice cream sandwiches||Marginal Utility of ice cream sandwiches|
_____ ice cream sandwiches
Economics is all about making good choices under conditions of scarce resources. Finding the best option is a matter of maximizing utility: a phrase that economists use to quantify satisfaction or happiness.
Answer and Explanation: 1
Assuming that the man wants to spend his entire budget of $6 on either donuts or ice cream sandwiches, his two best options are to purchase 3 of each...
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fromChapter 3 / Lesson 2
Learn about utility maximization. Discover various types of utility, examine utility maximizing rules, and study examples of maximizing utilities in economics.