Question
You just won a $120 shopping spree at a store that sells only DVDs and CDs. You are trying to determine what combination of these
You just won a $120 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.
a. Construct your consumption possibilities schedule. (14 marks)
Point | DVDs ($20) | CDs ($10) |
A | ||
B | ||
C | ||
D | ||
E | ||
F | ||
G |
b. Complete the table. (28 marks)
CDs ($10) | Total Utility | Marginal Utility | Marginal Utility per Dollar | DVDs ($20) | Total Utility | Marginal Utility | Marginal Utility per Dollar | ||
0 | 0 | 0 | 0 | ||||||
1 | 60 | 1 | 180 | ||||||
2 | 110 | 2 | 240 | ||||||
3 | 150 | 3 | 380 | ||||||
4 | 180 | 4 | 500 | ||||||
5 | 200 | 5 | 600 | ||||||
6 | 210 | 6 | 660 |
c. What is your utility maximization level?(2 marks)
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