Suppose Sirach Knows That the Price of Doughnuts Is $3

question 80

True/False

Suppose Sirach knows that the price of doughnuts is $3 and the price of cupcakes is $4. He also believes that the next doughnut he consumes will increase his total utility by 6 utils and the next cupcake will increase his total utility by 10 utils. Assuming he has enough money to buy either, Sirach should buy a doughnut next.

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Definitions:

Mental Capacity to Contract

The ability of an individual to fully understand the terms and conditions of a contract to which they are a party, including the implications of entering the contract.

Nature and Effect

A term used to assess the inherent characteristics of something and its resulting consequences or impacts.

Good Faith Purchaser

A person who buys property without knowledge of any existing claims or defects in title, thus protected under the law.

Valuable Consideration

Any benefit, right, or interest that has tangible or intangible worth, which is provided by one party to another as part of a contract.