Utility Maximization Nate is currently spending his entire budget on two goods: food and entertainment. He was willing to pay $2 for the last unit of food he purchased and $2,000 for the last unit of entertainment he purchased. Which of the following is the best explanation of why he is willing to pay so much more for entertainment? Choose 1 answer: Nate is irrational and doesn't understand that food is a necessity and entertainment is not. Nate's total utility from entertainment is higher than his total utility from food Nate's total utility from food is higher than his total utility from entertainment. Nate's marginal utility from food is higher than his marginal utility of entertainment

Utility Maximization Nate is currently spending his entire budget on two goods: food and entertainment. He was willing to pay $2 for the last unit of food he purchased and $2,000 for the last unit of entertainment he purchased. Which of the following is the best explanation of why he is willing to pay so much more for entertainment? Choose 1 answer: Nate is irrational and doesn't understand that food is a necessity and entertainment is not. Nate's total utility from entertainment is higher than his total utility from food Nate's total utility from food is higher than his total utility from entertainment. Nate's marginal utility from food is higher than his marginal utility of entertainment

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and $10, respectively. If the consumer is observed to buy 5 units of X and 10 units of Y, where the respective Marginal Utilities of X and Y are, 50 and 40 utils, is the consumer in equilibrium? Explain why or why not. If the consumer is not in equilibrium under conditions in d), suggest another combination that would possibly achieve equilibrium. Explain your answer.
The principle of diminishing marginal utility says that people don't enjoy consuming more of a good. True or False and Explain the choice
am. 113.
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Consumer spends $360 per week on two goods, X and Y. PX=$ 3 and PY=$2. His utility function is U= 2X2Y. What quantities of X and Y does he buy each week in equilibrium?
Refer to the table below. If the subscription price for a sports app is $2 per week, the subscription price of a game app is $1 per week, and a student has $9 per week to spend, what quantities will she purchase at a consumer optimum? Quantity of Sports Apps per week Marginal Utility (utils) Quantity of Game Apps per Week Marginal Utility (utils) 1 1,200 1 1,700 2 1,000 2 1,400 3 800 3 1,100 4 600 4 800 5 400 5 500 6 100 6 200
Mr. Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit) and 6 units of good Y (priced at $2 per unit). The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 18. If Mr. Rational is a utility maximizer, he should: buy less of X and more of Y. buy X and Y in the quantities indicated. buy more of X and less of Y. not buy anything. buy less of X and even lesser than that of Y.
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