Question

At the optimal quantities of digital apps and portable power banks determined in your answer to Problem 20-21, after rounding to the nearest 10 cents, is the $ 26 income all spent at the new consumer optimum?

Short answer

Yes, all income is spent at the new consumer's optimum

Step-by-step solution

Given Information

Marginal utility is the additional fulfilment a shopper gets from having another unit of a decent or administration. The idea of marginal utility is utilized by financial analysts to decide the amount of a thing buyers will buy. The law of decreasing marginal utility is frequently used to legitimize moderate charges.

Explanation

We know,

$\text{Marginal Utility}=\frac{\text{Change in No. of Units Consumed}\left(\mathrm{\Delta }TU\right)}{\text{Change in Total Utility}\left(\mathrm{\Delta }Q\right)}$

The total spending is,

$Totalspending=D\times P_d+P\times P_p$

$$\begin{gathered} =3\times \mathrm{\$}5.97+3\times \mathrm{\$}2.70 \\ =\$26 \end{gathered}$$

hence all income is spent at the new consumer's optimum as total spending = total income.