Homework on Chapter 5

Homework on Chapter - consuming movie rentals 2 And units of consumer goods 3 Given the prices of movie rentals and consumer goods her preferences

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Homework on Chapter 5 A college student has a weekly budget of $40. She prefers to spend this on video rentals and other consumer goods. Video rentals cost $4 each, while consumer goods costs on average, $8 per unit. Her preferences are reflected in the following marginal utilities. Video Rental @ Consumer Goods @ Quanti ty $4 $8 Per week MU MU / Price MU MU / Price 0 1 40 56 2 28 32 3 20 24 4 12 18 5 8 12 6 6 8 1. Given her present weekly budget of $40, the prices of movie rentals and Consumer goods, the college student will maximize her total utility by
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Unformatted text preview: consuming: ___ movie rentals, 2. And___ units of consumer goods. 3. Given the prices of movie rentals, and consumer goods, her preferences, and her weekly budget, she will be able to enjoy ___ units of utility. 4. Now, while every thing else remain the same, the price of Consumer goods drops to $6. To maximize her total utility, she will now buy ___ units of consumer goods 5. And ___ movie rentals. 6. Use the information you developed to draw the demand curve for consumer goods....
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This note was uploaded on 04/22/2008 for the course ECON 201 taught by Professor Joyce during the Spring '07 term at Drexel.

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