Amy is shopping at a dollar store. She is currently buying 5 bracelets that cost $1 each and 4 sodas that cost $1 each. The table below indicates the marginal utility she obtains when she purchases this combination.
Quantity Marginal Utility
Bracelets 5 30
Sodas 4 40
a. Is this consumer maximizing his/her utility?
b. If not, should she consume more bracelets or more sodas? Explain.
c. Answer the following assuming that one more bracelet is purchased and one less soda is consumed:
1. What happens to the Marginal Utility of bracelets and the Marginal Utility of soda?
2. What happens to the Total Utility received?
3. What happens to the total dollars spent?