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21 February, 10:15

An optimizing consumer currently spends money on many goods. The last pair of sunglasses she bought cost $15 and gave her 10 utils of satisfaction. If this same consumer spends $10 on a graphic novel and is still optimizing utility, how many utils will she receive from the purchase? (Give your answer to two decimals)

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  1. 21 February, 11:04
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    6.67 units of satisfaction

    Explanation:

    As the consumer optimize utility the graphic novel should provide utility at the same rate as the sunglasses because the last dollar spent on any good or service should match the same utility as the last dollar on all the other goods.

    10 units of satisfaction over $15 - -> 1 unit for every $1.50

    $10 dollar / 1.5 conversion rate = 6.67 units of satisfaction
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