Question

Janice really likes potatoes. At best any other goods are worth less than a dollar to her, potatoes cost $1.25 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 $3.00 to spend? 2 * pound(s) of potatoes.

Answer 1

Solution:-

Janice will buy potatoes up to the level where potatoes worth is more than cost

(a) One potatoes

Because the utility from the second and third potato is lower than the price

(b) One potatoes

Because the utility from the second and third potato is lower than the price