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Miguel has a weekly allowance of $17, all of which he spends on used books (C) and movie rentals (M), whose respective prices are $4 and $3. His utility from these purchases is given by U(C) + V(M). If the values of U(C) and V(M) are as shown in the table, is Miguel a utility maximizer if he buys 2 books and rents 3 movies each week? If not, how should he reallocate his allowance? C 0 1 2 3 4 U(C) 0 12 20 24 28 M ON 34 1 2 V(M) 0 21 33 39 42

Miguel has a weekly allowance of $17, all of which he spends on used books (C) and movie rentals (M), whose respective prices are $4 and $3. His utility from these purchases is given by U(C) + V(M). If the values of U(C) and V(M) are as shown in the table, is Miguel a utility maximizer if he buys 2 books and rents 3 movies each week? If not, how should he reallocate his allowance? C 0 1 2 3 4 U(C) 0 12 20 24 28 M ON 34 1 2 V(M) 0 21 33 39 42

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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5. Miguel has a weekly allowance of $17, all of which he spends on used books (C) and movie rentals (M), whose respective prices are $4 and $3. His utility from these purchases is given by U(C) + V(M). If the values of U(C) and V(M) are as shown in the table, is Miguel a utility maximizer if he buys 2 books and rents 3 movies each week? If not, how should he reallocate his allowance? C 0 1 234 U(C) 0 12 20 24 28 M 1 2 3 4 V(M) ON MON 21 33 39 42
Transcribed Image Text:5. Miguel has a weekly allowance of $17, all of which he spends on used books (C) and movie rentals (M), whose respective prices are $4 and $3. His utility from these purchases is given by U(C) + V(M). If the values of U(C) and V(M) are as shown in the table, is Miguel a utility maximizer if he buys 2 books and rents 3 movies each week? If not, how should he reallocate his allowance? C 0 1 234 U(C) 0 12 20 24 28 M 1 2 3 4 V(M) ON MON 21 33 39 42
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