Question
A rational consumer will purchase only 1 unit of the product represented by these data, since that amount maximizes marginal utility. Do you agree? Explain
"A rational consumer will purchase only 1 unit of the product represented by these data, since that amount maximizes marginal utility." Do you agree? Explain why or why not.
Question 3 options:
A) Agree. If marginal utility of the second unit is less than the first, you will not buy it. This would be a bad decision, even if the price was just a few pennies. You never buy more than one of the same item, do you?
B) Disagree. We make decisions "at the marginal". If the marginal benefit (that is, the utility - the happiness or satisfaction) of a second unit is greater than the marginal cost (that is, the price of the unit), then buy it. Consumers are interested in maximizing total utility, not marginal utility. Don't you ever buy more than one of the same item?
Please give proper answer with explanation
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