UTILITY MAXIMIZATION The following tables illustrate Eileen'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 11eb5b3b_7815_ba28_a06e_cfed22eedae8_SM2291_00 Movies from a Video Store 11eb5b3b_7815_ba29_a06e_65070ac2ce1d_SM2291_00 a. Complete the tables. b. Do these tables show that Eileen's preferences obey the law of diminishing marginal utility? Explain your answer. 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?

ECON MACRO 5th Edition by William McEachern

النسخة 5الرقم المعياري الدولي: 978-1305631946

ECON MACRO 5th Edition by William McEachern

النسخة 5الرقم المعياري الدولي: 978-1305631946

تمرين 4

UTILITY MAXIMIZATION The following tables illustrate Eileen'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

Movies from a Video Store

a. Complete the tables.
b. Do these tables show that Eileen's preferences obey the law of diminishing marginal utility? Explain your answer.
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?

التوضيح

موثّق

a. Utility Table: Movies in Theatre
Uti...