Eileen’s utility from renting the movies online and from watching the first-run movies in a theatre. Concept Introduction: Marginal Utility : It is the net addition to the total utility when an additional unit of good is being consumed. MU = TU n − TU n − 1 Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Question

(Table: Marginal Utility per Dollar of Twix) Use Table: Marginal Utility per Dollar of Twix. The price of Twix is $2 per bar. If the price of Twix increases to $3 per bar, the marginal utility per dollar for each bar of Twix will: Table: Marginal Utility per Dollar of Twix Bars Quantity of Twix bars Total utility 10 0 1 6 2 10 3 13 15 16 5 O remain constant. O increase O decrease. O fluctuate randomly.

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Question

Chapter 6, Problem 4P

To determine

Eileen’s utility from renting the movies online and from watching the first-run movies in a theatre.

Concept Introduction: Marginal Utility: It is the net addition to the total utility when an additional unit of good is being consumed.

MU=TUn−TUn−1

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

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