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(Solved): Suppose your classmate Musashi loves to eat dessertso much so that he allocates his entire weekly ...



Suppose your classmate Musashi loves to eat dessert—so much so that he allocates his entire weekly budget to chocolate mousse and pie. The price of one bowl of chocolate mousse is $1.00, and the price of a piece of coconut crème pie is $4.00. At his current level of consumption, Musashi's marginal rate of substitution (MRS) of chocolate mousse for pie is 4. In other words, Musashi is willing to sacrifice four bowls of chocolate mousse for one piece of pie per week. Does Musashi's current consumption bundle maximize his utility? That is, does it make him as well off as possible? If not, how should he change it to maximize his utility? Musashi could increase his utility by buying more chocolate mousse and less pie per week. Musashi could increase his utility by buying less chocolate mousse and more pie per week. Musashi's current bundle maximizes his utility, and he should keep it unchanged.



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