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Joseph is currently spending his entire budget on two goods: food and entertainment. He was willing to pay $2 for the last unit of food he purchased and $20 for the last unit of entertainment he purchased. Which one of the following is the best explanation of why he is willing to pay so much more for entertainment?

Joseph is currently spending his entire budget on two goods: food and entertainment. He was willing to pay $2 for the last unit of food he purchased and $20 for the last unit of entertainment he purchased. Which one of the following is the best explanation of why he is willing to pay so much more for entertainment?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Joseph is currently spending his entire budget on two goods: food and entertainment. He was willing to pay $2 for the last unit of food he purchased and $200 for the last unit of entertainment he purchased. Which one of the following is the best explanation of why he is willing to pay so much more for entertainment? a) Joseph's total utility from food is higher than his total utility from entertainment b) Joseph is irrational and doesn't understand that food is a necessity and entertainment is not c) Joseph's marginal utility from entertainment is higher than his marginal utility of food d) Joseph's marginal utility from food is higher than his marginal utility of entertainment
Transcribed Image Text:Joseph is currently spending his entire budget on two goods: food and entertainment. He was willing to pay $2 for the last unit of food he purchased and $200 for the last unit of entertainment he purchased. Which one of the following is the best explanation of why he is willing to pay so much more for entertainment? a) Joseph's total utility from food is higher than his total utility from entertainment b) Joseph is irrational and doesn't understand that food is a necessity and entertainment is not c) Joseph's marginal utility from entertainment is higher than his marginal utility of food d) Joseph's marginal utility from food is higher than his marginal utility of entertainment
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