How many bags of cookies does George buy each month?

Calculation of Bags of Cookies George Buys Each Month

Given:
Milk costs $2 per gallon
Marginal Utility (milk) = 4
Cookies cost $4 per bag

Required:
Determine the number of bags of cookies he buys each month

To determine the number of bags of cookies George buys each month, we need to first calculate the marginal utility of cookies.

Calculation:
We can use the following formula:
MU of Milk / Cost of Milk = MU of Cookies / Cost of Cookies

Substitute the given values:
MU of Milk = 4
Cost of Milk = $2
Cost of Cookies = $4

So, we have:
4 / 2 = MU of Cookies / 4
2 = MU of Cookies / 4
MU of Cookies = 2 * 4 = 8

From the given table:
Bags of Cookies: 1, 2, 3, 4, 5, 6
Marginal Utility: 20, 16, 12, 8, 4, 0

Since the marginal utility for 5 bags of cookies is 8, George buys 5 bags of cookies each month.