Lucinda collects Kewpie dolls, and can afford to buy up to six dolls. The table below describes the marginal benefit Lucinda gets for each additional doll she adds to her collection.

Question

Lucinda collects Kewpie dolls, and can afford to buy up to six dolls. The table below describes the marginal benefit Lucinda gets for each additional doll she adds to her collection.Lucinda's Marginal Benefit of Kewpie Dolls
Kewpie Dolls Marginal Benefit (dollars)
1 $15.00
2 12.00
3 9.00
4 6.00
5 3.00
6 0.00
If the price of Kewpie dolls is $6.00 per doll, how many dolls would Lucinda buy if she is rational?

Accepted Answer

Final answer:Lucinda, as a rational consumer, would buy four Kewpie dolls because for each of these dolls, the marginal benefit is greater than or equal to the price. After the fourth doll, the marginal benefit is less than the price, so she would not purchase any more.Explanation:The question involves the concept of marginal benefit and rational consumer choices in economics. Lucinda collects Kewpie dolls and evaluates the marginal benefit of each additional doll to her collection. If Kewpie dolls are priced at $6.00 each, Lucinda, as a rational consumer, would purchase dolls as long as the marginal benefit of the doll is greater than or equal to the price of the doll.We can compare the marginal benefit of each doll to the price of a doll to decide how many Kewpie dolls Lucinda would buy:1st doll: Marginal Benefit = $15.00 (greater than $6.00) - Buy the doll2nd doll: Marginal Benefit = $12.00 (greater than $6.00) - Buy the doll3rd doll: Marginal Benefit = $9.00 (greater than $6.00) - Buy the doll4th doll: Marginal Benefit = $6.00 (equal to $6.00) - Buy the doll5th doll: Marginal Benefit = $3.00 (less than $6.00) - Do not buy the doll6th doll: Marginal Benefit = $0.00 (less than $6.00) - Do not buy the dollThus, Lucinda would buy four Kewpie dolls. This is because the marginal benefit from each of these dolls is greater than or equal to the price of the doll. After the fourth doll, the marginal benefit drops below the price, which indicates that buying additional dolls would not be a rational decision for her....

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Lucinda collects Kewpie dolls, and can afford to buy up to six dolls. The table below describes the marginal benefit Lucinda gets for each additional doll she adds to her collection.