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21 February, 06:05

Suppose the price of a sweater is $15. julia's marginal benefit for purchasing each additional sweater is given in the table below. julia gets the most benefit from the first sweater and less benefit from each additional sweater. if julia is behaving rationally, how many sweaters will she purchase?

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  1. 21 February, 08:36
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    (Assuming the marginal benefits of the sweaters are: $50, $35, $30, $23, $12, $8, in order of purchase.)

    Julia has a reducing marginal benefit for sweaters, meaning she values the first sweater she buys more than the second, which she values more than the third, and so on. The given list shows Julia’s marginal benefit for each additional sweater she buys. Julia will buy sweaters until her marginal benefit is lower than the price of a sweater, which is $15. This means Julia will buy 4 sweaters, since her marginal benefit for a 5th sweater is $12, which is lower than the price of a sweater, $15.
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