Question

B. if lucinda has only $18 to spend and the price of kewpie dolls and the price of beanie babies are both $6, how many of each would lucinda buy if she were rational? 0 kewpie dolls and 3 beanie babies 3 kewpie dolls and 0 beanie babies 2 kewpie dolls and 1 beanie baby 1 kewpie doll and 2 beanie babies

Answer 1

Given the table below comparing the marginal benefit Lucinda gets from Kewpie dolls and Beanie Babies.

$\begin{tabular} {|p {2cm}|p {2cm}|p {2cm}|p {2cm}|} \multicolumn {4} {|c|} {Lucinda's Kewpie Doll and Beanie Baby Marginal Benefits}\\[1ex] \multicolumn {2} {|c|} {Kewpie Dolls}&\multicolumn {2} {|c|} {Beanie Babies}\\[1ex] 1&\ 15.00&1&\ 12.00\\ 2&\ 12.00&2&\ 10.00\\ 3&\ 9.00&3&\ 8.00\\ 4&\ 6.00&4&\ 6.00\\ 5&\ 3.00&5&\ 4.00\\ 6&\ 0.00&6&\ 2.00\\ \end{tabular}$

If lucinda has only $18 to spend and the price of kewpie dolls and the price of beanie babies are both $6,

Lucinda will buy the combination for which marginal benefit is the same.

Therefore, Lucinda will buy 2 kewpie dolls and 1 beanie baby, if she were rational.