Question
In: Economics
Potatoes cost Janice $1.00 per kilogram, and she has $5.00 that she could possibly spend on...
Potatoes cost Janice $1.00 per kilogram, and she has $5.00 that
she could possibly spend on potatoes or other items. If she feels
that the first kilogram of potatoes is worth $1.50, the second
kilogram is worth $1.14, the third kilogram is worth $1.05, and all
subsequent kilograms are worth $0.30, how many kilograms of
potatoes will she purchase? What if she only had $2.00 to
spend?
Janice will purchase with her original $5.00 of
income.
Janice will purchase when her income is $2.00.
Solutions
Expert Solution
Janice will purchase potatoes as long as the worth of potatoes to Janice is atleast equal to the price of potatoes
Price of potatoes = 1
When income is 5, she will purchase 3 kg of potatoes as the worth of 3rd kg = 1.05 > 1 but the worth of 4th kg < 1
When income is 2, she will purchase 2 kg of potatoes as the worth of 3rd kg = 1.14 > 1 and she does not have income left to buy the 3rd kg although she would like to.
Rahul Sunny answered 2 years agoRelated Solutions
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