Suppose you have a monthly entertainment budget that you use to rent movies and purchase cds. you currently use your income to rent 5 movies per month at a cost of $5.00 per movie and to purchase 5 cds per month at a cost of $10.00 per cd. your marginal utility loading ... from the fifth movie is 3030 and your marginal utility from the fifth cd is 5050. are you maximizing utility? you are

Question

Business

Morgan Mckenzie

4 July, 19:54

Suppose you have a monthly entertainment budget that you use to rent movies and purchase cds. you currently use your income to rent 5 movies per month at a cost of $5.00 per movie and to purchase 5 cds per month at a cost of $10.00 per cd. your marginal utility loading ... from the fifth movie is 3030 and your marginal utility from the fifth cd is 5050. are you maximizing utility? you are

+4

Answers (1)

Know the Answer?

Ismael · Answer 1

You are not maximizing utility, because the marginal utility per dollar spent renting movies is not equal to the marginal utility per dollar spent on CDs. We will maximizing utility when the consumers decide to allocate their money incomes so that the last dollar spent on each product purchased yields the same amount of extra marginal utility.