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Unformatted text preview: 6.33 9.33 14.00 How a Change in Price of Movies Affects Lisa's Choices Movies ($3 each) Marginal utility per dollar spent 16.67 12.67 11.00 9.67 8.33 8.33 7.00 6.00 5.00 4.00 3.00 Bowling ($3 per six pack) Marginal utility per dollar spent 5.00 5.33 5.67 6.00 6.33 8.33 8.33 9.33 12.00 14.00 25.00 Quantity 0 1 2 3 4 5 5 6 7 8 9 10 Games 10 9 8 7 6 5 5 4 3 2 1 0 A Fall in the Price of Movies Movies Bowling Lisa's Price (dollars per six-pack) Price (dollars per movie) 6 Lisa's demand for movies 6 Lisa's demand for bowling when movies cost $3 demand for bowling when movies cost $6 3 3 0 Quantity (movies per month) 2 5 0 Quantity (games per month) 5 6 How a Change in Price of Bowling Affects Lisa's Choices Movies ($3 each) Marginal utility per dollar spent 12.67 9.67 7.00 5.00 3.00 Bowling ($6 per game) Marginal utility per dollar spent 4.17 4.67 6.00 7.00 7.00 12.50 Quantity 0 2 4 6 8 10 Games 5 4 3 2 2 1 0 A Rise in the Price of Bowling Price (dollars per game) 6 Price (dollars per movie) Bowling Lisa's demand for bowling Movies 6 Lisa's demand for movies when bowling costs $6 Lisa's demand for movies when bowling costs $3 3 3 0 Quantity (games per month) 2 5 0 Quantity (movies per month) 5 6 Predictions of Marginal Utility Theory Two predictions of marginal utility theory: When the price of a good rises, the quantity demanded for that good decreases. If the price of one good rises, the demand for another good that can serve as a substitute increases. EXPLAINE D theory...
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