Question

suppose the price of a sweater is $40. julia’s marginal benefit for purchasing each additional sweater is given in the table below. julia gets most benefit from the first sweater and less benefit from each additional sweater. if julia is behaving rationally, how many sweaters will she purchase?

value: 10.00 points Suppose the price of a sweater is $40. Julia's margina sweater. If Julia is behaving rationally, how many swe Marginal Benefit 1st sweater 2nd sweater 3rd sweater 4h sweater 5th sweater 6th sweater 80 65 60 53 42 38 Julia will purchase sweaters References eBook & Resources Numeric Response

Answer 1

Answer is 5 sweaters

since at equilibrium MB should be greater than or equal to the price of a sweater , so when s = 5, MB = 42

But when s = 6, then MB is 38, thus price of a sweater becomes higher than the additional benefit derived from 6 th sweater

So only 5 sweaters are bought .