Bob values the utility of a single scoop of Baskin-Robbins ice cream at $1.50. A double scoop gives total utility of $2.25, while a triple scoop yields $2.60. Baskin-Robbins charges $1.35 for a single, $1.95 for a double, and $2.35 for a triple. How many scoops will Bob buy?
What will be an ideal response?
Bob will buy a double. The first scoop has marginal utility of $1.50, which exceeds the price of $1.35. The second scoop has MU of 75 cents, exceeding the marginal price of 60 cents. The third scoop adds MU of 35 cents, which falls below the marginal 40 cents addition to price.
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