Business, 24.11.2021 02:50, multibeastpr
Miles is three years old and his grandparents have given him money to spend at the toy store as a birthday present. Miles' number one favorite thing to play with is building blocks. Assume that Miles' utility will increase by 100 units if he purchases a new set of building blocks and and it will cost him $50. His second favorite thing to play with is fire trucks. Fire trucks cost $20 and each new fire truck improves Miles' utility by 80 units. His third favorite toy is trains. Trains improve his utility by 15 units and cost $5 each.
Required:
a. If Miles buys only one toy, which should he buy to maximize his utility?
b. In general, which condition below indicates that a consumer is maximizing his or her utility regarding spending on two goods?
Answers: 1
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