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Carlos spends income on books and coffee. Coffee costs $4, books cost $10, and at his current consumption bundle the marginal utility of coffee is 20 utils and the marginal utility of books is 60 utils. Therefore: Carlos could increase utility by buying more coffee and fewer books. Carlos could increase utility by buying more books and less coffee. Carlos makes consumption decisions in line with what Homo Economicus would choose. Carlos is maximizing utility.

Carlos spends income on books and coffee. Coffee costs $4, books cost $10, and at his current consumption bundle the marginal utility of coffee is 20 utils and the marginal utility of books is 60 utils. Therefore: Carlos could increase utility by buying more coffee and fewer books. Carlos could increase utility by buying more books and less coffee. Carlos makes consumption decisions in line with what Homo Economicus would choose. Carlos is maximizing utility.

Micro Economics For Today
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 19SQ
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Carlos spends income on books and coffee. Coffee costs $4, books cost $10, and at his current consumption bundle the marginal utility of coffee is 20 utils and the marginal utility of books is 60 utils. Therefore: Carlos could increase utility by buying more coffee and fewer books. Carlos could increase utility by buying more books and less coffee. Carlos makes consumption decisions in line with what Homo Economicus would choose. Carlos is maximizing utility.
Transcribed Image Text:Carlos spends income on books and coffee. Coffee costs $4, books cost $10, and at his current consumption bundle the marginal utility of coffee is 20 utils and the marginal utility of books is 60 utils. Therefore: Carlos could increase utility by buying more coffee and fewer books. Carlos could increase utility by buying more books and less coffee. Carlos makes consumption decisions in line with what Homo Economicus would choose. Carlos is maximizing utility.
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