Map a Sapling Learning macmillan learning Miles is 3 years old and because his g

Question

Map a Sapling Learning macmillan learning Miles is 3 years old and because his grandparents love to spoil him, they have given him money to spend at the toy store as a birthday present. Miles' number-one favorite thing to play with are Legos. Legos are expensive though. Assume that Miles' utility will increase by 100 units if he purchases a new set of Legos and and it will cost him $50. Miles's second favorite thing to play with are firetrucks. Firetrucks cost $20 and each new firetruck improves his utility by 80 units. Miles' third favorite toy are trains. Trains improve his utility by 15 units and cost $5 each Miles doesn't have to spend all of his money at once, but wants to get as much happiness as possible from his money In general, which condition below indicates that a If Miles buys only one toy, which consumer is maximizing his or her utility regarding should he buy to maximize his utility? spending on two goods? Train O MUV/MU Pricev/Price Legos O Mux Muy Pricex Price Firetruck O MUV/Price MUvi Price MU Price MUV Price

Explanation / Answer

MU from Legos = 100, Price for Legos = 50, MU of money = 100/50 = 2

MU from Firetrucks = 80, Price for Firetrucks = 20, MU of money = 80/20 = 4

MU from Trains= 15, Price for Legos = 5, MU of money = 15/5 = 3

So Miles should buy firetrucks.

The condition for two commodities equilibrium for a consumer will be MUx/Px=MUy/Py

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