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Bobby Consumes Only Chocolate Ice Cream and Vanilla Ice Cream

question 128

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Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His marginal utility of chocolate is 200 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Bobby should


Definitions:

F.O.B. Buffalo

An Incoterm meaning Free On Board Buffalo, indicating that the seller delivers when the goods are loaded on board a vessel at the Buffalo location, with the seller covering transportation to that point but the buyer taking responsibility thereafter.

Tender

An offer of payment or delivery of goods in fulfillment of an obligation or contract.

Buffalo, NY

A city in New York State, known for its snow-heavy winters and as the home of the Buffalo wings.

Agreed Carrier

A carrier organization that has been approved or designated by parties in an agreement to transport goods.

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