Question
Assume that Eric uses his income to purchase 2 types of goods, a set dinner and a movie ticket. Suppose that the marginal utility of
Assume that Eric uses his income to purchase 2 types of goods, a set dinner and a movie ticket.
Suppose that the marginal utility of a set dinner is 500 utils and the cost is RM20 per set; while the
marginal utility of a movie ticket is 400 utils and the cost is RM10 per ticket.
(i) Using the cardinal utility approach, determine whether Eric has maximised his utility.
Explain. (6 marks)
(ii) Based on part (i), explain how Eric can maximise his utility.
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i Using the cardinal utility approach we can determine whether Eric has maximized his utility by com...
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
