Question
Utility Maximization You just won a $100 shopping spree at a store that sells only DVDs and CDs. You are trying to determine what combination
Utility Maximization You just won a $100 shopping spree at a store that sells only DVDs and CDs. You are trying to determine what combination of these two goods would maximize your utility. The price of CDs is $10 and DVDs are $20. Below is the total utility you receive from consuming these goods. CDs Total Utility DVDs Total Utility 1 60 1 160 2 110 2 300 3 150 3 420 4 180 4 520 5 200 5 600 6 210 6 660 a. Calculate the marginal utility and marginal utility per dollar for each unit of each good. ( ____/4) b. If you only had $100, EXPLAIN how you determine the utility maximizing combination of CDs and DVDs? ( ____/3) c. If your reward increased and your income constraint became $130, EXPLAIN how you determine the utility maximizing combination of CDs and DVDs? ( ____/3)
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