Question

Suppose there are four products that Samuel can purchase. Samuel obtains a discount on each of the products. The total benefit obtained by Samuel through discounts is calculated by finding out the difference in the actual price of the product and the discounted price of the product. This is shown on the Y axis of the graph. The X axis of the graph represents the products which Samuel can purchase Graph 8- 7- In this case, Samuel will purchase product an optimal product. as Total benefit obtained by Samuel 1- Products Enter your answer in the answer box. 7:15) is based on Acemoglu/Laibson/List: Microeconomics, 2e Total benefit (in dollars)

Answer 1

Answer: Samuel will purchase product 2 as an optimal product.

Samuel will purchase that product which will maximize his total benefit. That is, the optimal product is the product which gives him the highest Total benefit. In the graph when Samuel buys product 1, he gets a total benefit of 4. When he buys product 2, he gets a total benefit of 5. When he buys product 3, the total benefit he gets is 2. And when he buys product 4, his total benefit is 3.

Therefore, he gets the maximum Total benefit of 5 when he buys product 2. Thus the answer is: product 2.