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Ladan has $500 each semester to spend on textbooks and sandwiches. Textbooks are $100 each and sandwiches are $5 each. Assume that diminishing marginal utility
Ladan has $500 each semester to spend on textbooks and sandwiches. Textbooks are $100 each and sandwiches are $5 each. Assume that diminishing marginal utility applies to both goods. She has purchased 3 textbooks this semester and 40 sandwiches. She tells you that her marginal utility from the next textbook is about 100 utils and the marginal utility from the next sandwich is about 15 utils. Has Ladan successfully maximized her utility this semester? Should she adjust her spending next semester?
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