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2. Suppose Joe buys his books at Pastures and Commoner bookstores where they sell for $12 each. How many novels will he buy each month?
We know that utility maximizing consumers like Joe will purchase every novel for which his marginal utility is greater than the price, so once we think in these terms the answer is easy. His marginal utility is above $12 for novels 1 through 4, but the fifth novel only gives him a marginal utility of $11 so he won't buy that one. He will buy 4 novels at a price of $12 each.
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| Joe's Utility |
| Novels | Utility in $ | MU |
| 0 | $0 | $0 |
| 1 | $25 | $25 |
| 2 | $45 | $20 |
| 3 | $63 | $18 |
| 4 | $77 | $14 |
| 5 | $88 | $11 |
| 6 | $96 | $8 |
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