Paul consumes only books and DVDs. At his current consumption bundle, his marginal utility from DVDs is 21 and from books is 4 . Each DVD costs $11 , and each book costs $1 . Is he maximizing his utility? Explain. Let MU Subscript Upper B be the marginal utility of books, MU Subscript Upper D be the marginal utility from DVDs, Upper P Subscript Upper B be the price of books, Upper P Subscript Upper D be the price of DVDs, and MRS be the marginal rate of substitution. Paul is
Answers: 1
= Marginal utility from DVDs = 21
= Marginal utility from books = 4
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Paul consumes only books and DVDs. At his current consumption bundle, his marginal utility from DVD...
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