Chapter 51, Problem 3CYU

To determine

The reason why 4 clams and 10 pounds of tomatoes is not an optimal consumption bundle for S.

Explanation of Solution

4 clams and 10 pounds of tomatoes is not an optimal consumption bundle for S because it is over the budget consumption bundle but given the financial constraints, the ideal consumption bundle maximizes utility. For example, like the budget line in the figure, the optimal consumption needs to be below or within the budget line without any extension or exceeding it; therefore, this is not an optimal consumption bundle.

Economics Concept Introduction

Introduction: Marginal utility is the benefit that a person consumes or enjoys while using an additional unit of a good. After the consumer’s maximum utility, the marginal utility per dollar spent remains the same for all goods in the consumption bundle which is called optimal consumption.