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# 2- (Utility Maximization) The following tables illustrate

### Customer Question

Customer: 2- (Utility Maximization) The following tables illustrate ***** *****’s utilities from watching first-run movies in a theater and from renting movies from a video store. Suppose that she has a monthly movie budget of \$36, each movie ticket costs \$6, and each video rental costs \$3. Movies in a Theater Q TU MU MU/P 0 0 —— —— — 1 200 —— ——— 2 290 —— ——— 3 370 —— ——— 4 440 —— ——— 5 500 —— ——— 6 550 —— ——— 7 590 —— ——— Movies from a Video Store Q TU MU MU/P 0 0 —— ———— 1 250 —— ———— 2 295 —— ———— 3 335 —— ———— 4 370 —— ———— 5 400 —— ———— 6 425 —— ———— a. Complete the tables. b. Do these tables show that ***** *****’s preferences obey the law of diminishing marginal utility? Explain your answer. c. How much of each good does ***** ***** consume in equilibrium? d. Suppose the prices of both types of movies drop to \$1 while ***** *****’s movie budget shrinks to \$10. How much of each good does she consume in equilibrium?Read more: http://www.justanswer.com/homework/8afhb-2-utility-maximization-following-tables-illustrate.html#ixzz3teNuzKyy
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Customer: 2- (Utility Maximization) The following tables illustrate ***** *****’s utilities from watching first-run movies in a theater and from renting movies from a video store. Suppose that she has a monthly movie budget of \$36, each movie ticket costs \$6, and each video rental costs \$3. Movies in a Theater Q TU MU MU/P 0 0 —— —— — 1 200 —— ——— 2 290 —— ——— 3 370 —— ——— 4 440 —— ——— 5 500 —— ——— 6 550 —— ——— 7 590 —— ——— Movies from a Video Store Q TU MU MU/P 0 0 —— ———— 1 250 —— ———— 2 295 —— ———— 3 335 —— ———— 4 370 —— ———— 5 400 —— ———— 6 425 —— ———— a. Complete the tables. b. Do these tables show that ***** *****’s preferences obey the law of diminishing marginal utility? Explain your answer. c. How much of each good does ***** ***** consume in equilibrium? d. Suppose the prices of both types of movies drop to \$1 while ***** *****’s movie budget shrinks to \$10. How much of each good does she consume in equilibrium?
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Submitted: 1 year ago.
Category: Multiple Problems
Expert:  F. Naz replied 1 year ago.