Question: Suppose this consumer is currently ( for some reason ) eating Thai takeout 1 0 times per week and is spending all of her $
Suppose this consumer is currently for some reason eating Thai takeout times per week and is spending all of her $ income, so that she has no money left over for movie rentals. Is the consumer maximizing utility?
This consumer is not maximizing her utility. Thai takeout is more expensive than movie rentals, so she should be minimizing costs by renting movies instead of eating Thai food.
There is no way to tell if this consumer is maximizing utility because we are given only her marginal utility of each level of consumption. We would need to know her total utility to assess the optimality of her consumption.
This consumer is maximizing utility. Thai takeout meals always provide at least as much or more marginal utility than movie rentals, so she is right to spend all her money on Thai food.
This consumer is not maximizing utility. The consumer can improve her utility by consuming less Thai takeout meal and spending the money on movie rentals.
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