If the price of one good rises the demand for another

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Unformatted text preview: of Chapter 3 Movies ($3 per movie) Marginal utility Quantity per dollar spent spent 0 1 16.67 2 12.67 3 11.00 4 9.67 5 8.33 6 7.00 7 6.00 7 6.00 8 5.00 9 4.00 10 3.00 11 2.00 12 1.00 13 0.67 14 0.33 Lisa's Choices with an Income of $42 a Month 14 13 12 11 10 9 8 7 7 6 5 4 3 2 1 0 Bowling ($3 per game) Marginal utility Games per dollar 3.67 4.00 4.33 4.67 5.00 5.33 5.67 6.00 6.00 6.33 8.33 9.33 12.00 14.00 25.00 Individual Demand and Market Demand Market demand is the relationship between the total quantity demanded of a good and its price. Individual demand is the relationship between quantity demanded of a good by a single individual and its price. Individual and Market Demand Curves Price (dollars per movie) Quantity of movies demanded Lisa 1 2 3 4 5 6 + + + + + + Chuck 0 0 0 1 2 3 = = = = = = Market 1 2 3 5 7 9 7 6 5 4 3 2 Price (dollars per movie) 8 6 4 3 2 Lisa's demand Price (dollars per movie) Individual and Market Demand Curves 8 Market Demand 6 4 3 2 Chuck's demand 2 movies 5 + 2 = 7 movies 0 5 movies 2 4 5 6 8 0 2 4 5 6 8 9 Quantity (movies per month) Quantity (movies per month) The Paradox of Value Diamonds have a high price and a high marginal utility, while water has a low price and a low marginal utility. At consumer equilibrium, the marginal utility per dollar spent is the same for diamonds as for water....
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