Question

pters 1-3 Part 2 Janice really likes potatoes. Potatoes cost $0.50 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30. Instructions: Enter your answers as whole numbers. a. How many pounds of potatoes will she purchase? 3 pound(s) of potatoes b. What if she only had $2.00 to spend? pound(s) of potatoes

Answer 1

Answer

a)

A consumer consumes a good up to the willingness to pay is above or equal to the price of the good

so Janice will consume up to a willingness to pay > $0.5

she will purchase 3 units of potatoes

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b)

If she has only $2 to spend then also she will purchase the same amount as she can afford to pay for it as each item is $0.5 and 3 can be purchased in $1.5

3 units of potatoes.