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Q2. (a) Alice prefers to buy clothes and shoes. Marginal utilities from the last units purchased of the two products are 40 and 80, respectively.

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Q2. (a) Alice prefers to buy clothes and shoes. Marginal utilities from the last units purchased of the two products are 40 and 80, respectively. The price of clothes is RM60 and the price of shoes is RM100. Is she buying the utility-maximizing combination of clothes and shoes? If not, how should she reallocate her expenditures between the two goods? What does this theory tell us? (10 marks)

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