
EBK MICROECONOMICS
4th Edition
ISBN: 8220103647830
Author: KRUGMAN
Publisher: MAC HIGHER
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Question
Chapter 10, Problem 7P
To determine
To answer:
The following question based on the accompanying table given
Concept Introduction:
Marginal utility: This is the additional benefit or satisfaction derived from the consumption of an additional unit of a commodity or service.
Utility: This is the benefit or satisfaction derived from the consumption of a good or service
Expert Solution & Answer

Explanation of Solution
- The bundles available for Damien if he spends all of his income either going for gym or watching a movie
- The above table shows the marginal utility of each gym visit and each movie show and it also shows the marginal utility per hour spent at the gym and the marginal utility per hour spent at watching movies.
- The above diagram shows the marginal utility per hour spent on gym visits and the marginal utilities per hour spent on movies, the intersection of both curves is shown by the point ‘E’ and this point is considered as the optimal point which represents the optimal choice for Damien. The optimal bundle for Damien is the bundle containing
gym visits and
movies where the marginal utility per hour spent on gym equals the marginal utility of per hour spent on watching movies.
Gym visits,
movies
Gym visits,
movies
Gym visits,
movies
Gym visits,
movies
Gym visits,
movies
Gym visits,
movies
Gym visits,
movies
Gym visits,
movies
The above graph shows the budget curve of Damien with his income spent on either going for movies or going to the gym.
Quantity of Gym visits | Utility from gym visits | Marginal utilities from gym visits | Marginal utilities per hour | Quantity of movies | Utility from movies | Marginal utility from movies | Marginal utilities per hour |
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