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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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