| Question | Now go back to the original assumptions of problem 1 (novels cost $8, CDs cost $6, and income is $120). Suppose that Parvez is spending $120 monthly on paperback novels and used CDs. For novels, MU/P=5; for CDs, MU/P = 4. Is he maximizing his utility? If not, should he consume (1) more novels and fewer CDs or (2) more CDs and fewer novels? Explain briefly. |
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| Subject | business economics |
