Frank spends $75 on 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers

Question:

Frank spends $75 on 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers cost $2.50 each. Suppose that his MU from the final magazine is 10 utils while his MU from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should:

a. Reallocate spending from magazines to newspapers.

b. Reallocate spending from newspapers to magazines.

c. Be satisfied because he is already maximizing his total utility.

d. None of the above. 

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Microeconomics Principles, Problems and Policies

ISBN: 978-1259450242

20th edition

Authors: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn

Question Posted: