Question

A girl has eaten 2 units of an ice cream. Should she buy third ice cream

if MU derived from 2

nd unit of ice cream is 20 utils, Price of ice cream is 5 rupee

per unit and MUm is 4 utils.​

Answer 1

Explanation:

Consumer's equilibrium is struck when:

MUx/Px =MUm

Substituting the values, we find that 20/10(5*2) = 2.

she has already reached the point of equilibrium by consuming 2 ice cream. Thus, she should stop consuming any more ice creams.