Taylor's marginal utility from watching movies and marginal utility from eating out each month in utils are represented in the following table.Taylor spends exactly $100 every month on these two forms of entertainment,and the price per movie is $10 and price per dinner is $20. $$\begin{array} { | l | l | l | l | }
\hline \text { Movies/month } & \begin{array} { l }
\text { Marginal Utility } \
\text { from Movies }
\end{array} & \begin{array} { l }
\text { Eating } \
\text { Out/month }
\end{array} & \begin{array} { l }
\text { Marginal Utility } \
\text { from Eating Out }
\end{array} \
\hline 1 & 60 & 1 & 150 \
\hline 2 & 50 & 2 & 140 \
\hline 3 & 20 & 3 & 120 \
\hline 4 & 5 & 4 & 100 \
\hline
\end{array}$$
If Taylor watches 2 movies a month,Taylor will eat out _____ times per month,and have marginal utility per dollar of _____ from movies and _______ from eating out.

Question

Taylor's marginal utility from watching movies and marginal utility from eating out each month in utils are represented in the following table.Taylor spends exactly $100 every month on these two forms of entertainment,and the price per movie is $10 and price per dinner is $20. $$\begin{array} { | l | l | l | l | } 
\hline \text { Movies/month } & \begin{array} { l } 
\text { Marginal Utility } \
\text { from Movies }
\end{array} & \begin{array} { l } 
\text { Eating } \
\text { Out/month }
\end{array} & \begin{array} { l } 
\text { Marginal Utility } \
\text { from Eating Out }
\end{array} \
\hline 1 & 60 & 1 & 150 \
\hline 2 & 50 & 2 & 140 \
\hline 3 & 20 & 3 & 120 \
\hline 4 & 5 & 4 & 100 \
\hline
\end{array}$$
If Taylor watches 2 movies a month,Taylor will eat out _____ times per month,and have marginal utility per dollar of _____ from movies and _______ from eating out.

Quizplus · Accepted Answer

To determine the optimal consumption combination, we need to calculate the marginal utility per dollar of the last unit of each good.

For movies, the marginal utility per dollar is found by taking the marginal utility of the last movie and dividing by its price:

MU/Price = 50/10 = 5

For eating out, the marginal utility per dollar is found in the same way:

MU/Price = 120/20 = 6

So, for every dollar spent on eating out, Taylor gains 6 utils of satisfaction, while for every dollar spent on movies, she gains 5 utils. Therefore, Taylor should spend more on eating out and less on movies.

If Taylor watches 2 movies a month, she spends $20 on movies, leaving $80 for eating out. Based on the marginal utility per dollar, Taylor should eat out 4 times a month.

Total spending: 
$20 on movies
$80 on eating out

Total marginal utility per dollar:
Movies: 50/10 = 5
Eating out: 120/80 = 1.5

Note: The other answer choices are incorrect because they do not provide the correct combination of marginal utility per dollar for each good.

Taylor's Marginal Utility from Watching Movies and Marginal Utility from Eating