Ask Question
19 August, 12:12

A consumer has two basic choices: rent a DVD movie for $4.00 and spend 2 hours watching it, or spend $13 for a miniature golf game that takes 1 hour. If the marginal utilities of the movie and the miniature golf game are equal, and the consumer values time at $12 an hour, the rational consumer will most likely

+1
Answers (1)
  1. 19 August, 14:11
    0
    Play miniature golf instead of renting the movie.

    Explanation: Marginal utility is the added satisfaction derived from spending an extra unit of money.

    Now we can see that the consumer values time at $12 per hour, and they'll spend a total of $24 on watching the DVD because this will take 2 hours, the consumer will also spend just $12 on miniature golf because this takes just one hour.

    Now factoring the costs of the DVD and the miniature golf into the equation, we have:

    Total cost of renting and watching the DVD:

    $4 + $24 = $28

    Total cost of playing miniature golf:

    $13 + $12 = $25

    We can see that the consumer will spend less in playing miniature, while getting the same marginal utility with the other option.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A consumer has two basic choices: rent a DVD movie for $4.00 and spend 2 hours watching it, or spend $13 for a miniature golf game that ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers