Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter10: Financing And Producing Goods
Section: Chapter Questions
Problem 15AA
Related questions
Question
(Utility Maximization) The following tables illustrate Eileen's utilities from watching first-run movies in a theatre 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.
a. Complete the tables.
b. Do these tables show that Eileen's preferences obey the law of diminishing
c. How much of each good does Eileen consume in equilibrium?
d. Suppose the prices of both types of movies drop to $1 while Eileen's movie budget shrinks to $10. How much of each good does she consume in equilibrium?
Transcribed Image Text:Movies in a Theater
TU
MU
MU/P
1
200
2
290
3
370
4
440
5
500
550
7
590
Online Movies
TU
MU
MU/P
1
250
2
295
335
4
370
400
6
425
67
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