How many pounds of potatoes will she purchase? How many pounds will she purchase if she has only had $3.00 to spend?

Question

Potatoes cost Janice $0.50 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30 per pound.



Instructions: Enter your answers as a whole number.

How many pounds of potatoes will she purchase?

pound(s) of potatoes

How many pounds will she purchase if she has only had $3.00 to spend?

pound(s) of potatoes

Answer 1

Janice will only purchase 3 pounds of potatoes in either instance. At four potatoes, the cost of the potato is higher than the benefit she will get from the potatoes.

Answer 2

She's going to buy 3 points in either case. As long as the additional benefit, given in the problem in dollar values is higher than $0.50, which is the price of potatoes, she will buy them.

Consumers should always make the purchase as long as their marginal benefit is higher than the price of the product, often shortened to: MB = MC.