Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and eating out.The price of a movie is $8 and the price of a meal out is $15.If Jessy watches two movies per month,what is her marginal utility per dollar?
A) 80
B) 12
C) 10
D) 9

Question

Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and eating out.The price of a movie is $8 and the price of a meal out is $15.If Jessy watches two movies per month,what is her marginal utility per dollar?
A) 80 
B) 12 
C) 10 
D) 9

Quizplus · Accepted Answer

To calculate the marginal utility per dollar for movies and eating out, we need to calculate the marginal utility for each and divide by the price. 
For movies: 
- The price is $8, and Jessy watches two movies per month, so she spends $16 on movies. 
- Let's assume that the marginal utility for the first movie is 20, and the marginal utility for the second movie is 15. The total marginal utility is then 35. 
- Marginal utility per dollar for movies is 35/16 = 2.19. 
For eating out: 
- The price is $15, and we don't know how many meals Jessy eats out per month. Let's assume that she eats out once per month. 
- Let's assume that the marginal utility for the meal is 30. 
- Marginal utility per dollar for eating out is 30/15 = 2. 
To maximize her utility, Jessy should spend her $75 on the goods that give her the highest marginal utility per dollar. In this case, that would be eating out (2 > 2.19).

Therefore, C is the correct answer.

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