Taylor's marginal utility from watching movies and from eating out (in utils) is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is$10 and the price of each dinner is $20.Movies Marginal UtilityPer MonthPer Movie1234Multiple ChoiceO 4; 6; 2O 3:2; 6If Taylor eats out 3 times a month, Taylor will watchO 4; 6; 1/2605020O 3; 4; 45Dinners Out Marginal UtilityPer MonthPer Dinner1234150140120100movies, and have marginal utility per dollar offrom eating out and a marginal utility per dollar offrom going to the movies.

This theory explains how consumers choose various options to maximize their utility(U) given their…

Taylor's marginal utility from watching movies and from eating out (in utils) is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20. Movies Per Month 1 2 3 4 Multiple Choice O Marginal Utility Dinners Out Marginal Utility Per Movie Per Month Per Dinner O O f Taylor eats out 3 times a month, Taylor will watch 4:6; 2 3; 2; 6 60 50 20 4; 6; 1/2 5 1 2 3 4 150 140 120 100 movies, and have marginal utility per dollar of, from eating out and a marginal utility per dollar of from going to the movies.

Taylor's marginal utility from watching movies and from eating out (in utils) is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20. Movies Per Month 1 2 3 4 Multiple Choice O Marginal Utility Dinners Out Marginal Utility Per Movie Per Month Per Dinner O O f Taylor eats out 3 times a month, Taylor will watch 4:6; 2 3; 2; 6 60 50 20 4; 6; 1/2 5 1 2 3 4 150 140 120 100 movies, and have marginal utility per dollar of, from eating out and a marginal utility per dollar of from going to the movies.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 9P

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Similar questions

Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a roundâ€”trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.
Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
Is it possible for total utility to increase while marginal utility diminishes? Explain.
Would you expect total utility to rise or fall with additional consumption of a good? Why?
Who determines how much utility an individual will receive from consuming a good?
If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?