00:01
Hello.
00:04
The question is, is dave currently maximizing his utility? yes or no? so we know that at the utility optimization bundle, marginal utility per dollar are equal for each goods.
00:22
So marginal utility from consuming hot dogs, which is five.
00:31
This is marginal utility for hot dogs.
00:34
Divided by the price of one hot dog, which is $1, should be equal to the ratio of marginality for sodas, which is 3, divided by 0 .5, which is the price of soda.
00:55
And as you can see, they are not equal.
01:00
The second ratio is greater.
01:02
So they are not equal.
01:08
That's why no.
01:12
He is not currently maximizing utility.
01:16
No, he is not.
01:21
If not, how should he reallocate his spending in order to increase his utility? so he can either, see, he needs to increase the first ratio or to decrease the second ratio.
01:37
So he cannot change prices, but he can do not change prices, but he can do...