1. Utility Maximization: The following table illustrates Eileen's utilities from watching first-run movies in a theater and from renting movies online. Suppose that she has a monthly movie budget of $36, each movie ticket costs $6, and each video rental costs $3. Movies in a Theater Online Movies Total Total Quantity MU MU/p Quantity MU MU/p Utility Utility - - 1 200 1 250 2 290 2 295 3 370 3 335 4 440 4 370 5 500 5 400 550 420 7 590 7 430 a. Complete the table above. (35 points) b. How much of each good does Eileen consume? (15 points) c. Suppose the price of each movie ticket rises to $8 but the price of each video rental drops to $2. How much of each good does Eileen consume? (25 points)

1. Utility Maximization: The following table illustrates Eileen's utilities from watching first-run movies in a theater and from renting movies online. Suppose that she has a monthly movie budget of $36, each movie ticket costs $6, and each video rental costs $3. Movies in a Theater Online Movies Total Total Quantity MU MU/p Quantity MU MU/p Utility Utility - - 1 200 1 250 2 290 2 295 3 370 3 335 4 440 4 370 5 500 5 400 550 420 7 590 7 430 a. Complete the table above. (35 points) b. How much of each good does Eileen consume? (15 points) c. Suppose the price of each movie ticket rises to $8 but the price of each video rental drops to $2. How much of each good does Eileen consume? (25 points)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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