Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy eats out three times per month,what is her marginal utility per dollar spent?
A)120
B)8
C)15

Question

Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy eats out three times per month,what is her marginal utility per dollar spent?
A)120 
B)8 
C)15

Quizplus · Accepted Answer

To calculate marginal utility per dollar spent, we need to divide the marginal utility by the price. The marginal utility of a movie is 120 and the marginal utility of a meal out is 80 ($15/80 = 0.1875). Since the marginal utility per dollar spent is higher for a movie ($120/$8 = 15) than for a meal out (80/$15 = 5.33), Jessy should spend her money on movies rather than meals out. Therefore, the best choice is B.

Table 7.8 -Refer to Table 7.8.Jessy Spends No More Than $75 Per