Suppose that the marginal utility George gets from buying the 4th cookie is 6

Economics Dec 12, 2020

Suppose that the marginal utility George gets from buying the 4th cookie is 6. Each cookie costs $1. Suppose the marginal utility he gets from buying the 3rd bag of candy is 30 and each candy bag costs $2. To maximize utility, George should .....

Expert Solution

If George can buy 3 bags of candy for $2 each, he must have at least $6 to spend. If he only bought candy, he could get 3 bags and the utility would be at least 30. It appears that he would get more utility (happiness or satisfaction) if he spends all his money on candy.

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