Please help I understand how to fill in the table but need step by step instruct
ID: 1189058 • Letter: P
Question
Please help I understand how to fill in the table but need step by step instructions to do the rest. chicken this week. The marginal utility of chicken is therefore less than that of steak.e I imply that your mother should buy less chicken this week? Explairn. 2) Each ticket to a Winston Cup race costs $20, gains utility from attending races and musicals according the following table. each ticket to the musical theater costs $10. Neal Number alMarginal Race Numbet of Races Utility Utility Marginalof Total Marginal Theater Uility UtilityMarginal from Races 1000 1800 2500 3000 3200 Utility per Musicals from Dollar Utility per Dollar Musicals 1000 1800 2500 3100 3600 So1 3 0572 20 5 Fill the Marginal Utility columns and Marginal Utility per Dollar columns. What combination of Winston Cup Races and musical tickets does Neal purchase? Carefully explain how you know this. a. b. Suppose the tickets to the theater increase in price to $20. Now what combination of race tickets and musical tickets does Neal choose? c.Explanation / Answer
(a) You've filled in the table correctly, so I'm not repeating here. Your table is used for answering next questions, which you're having problem understanding.
(b) Neal will purchase that combination of Race & Theater tickets, which will give him exactly equal (Marginal Utility / Price) ratio.
That is, he will buy that combination for which,
(Marginal utility of Race tickets / Price of race tickets) = (Marginal utility of Theater tickets / Price of Theater tickets)
This condition is fulfilled when he buys 1 Race ticket (marginal Utility / Price = $50) and 5 Theater Tickets (marginal Utility / Price = $50).
So, Neil will buy 1 race ticket $ 5 theater tickets.
(c) Now price of musicals = $20. In this case we have 3 situations when (marginal Utility / Price) is equal for both types of tickets, that is,
1 Race, 1 Musical [In each case, (Marginal Utility / Price) = 1,000 / $20 = $50)
2 Races, 2 Musicals [In each case, (Marginal Utility / Price) = 1,000 / $20 = $50)
3 Races, 3 Musicals [In each case, (Marginal Utility / Price) = 1,000 / $20 = $50).
In this situation, Neil will choose that bundle which gives him Maximum Total Utility (TU).
For 1 Race, 1 Musical, TU = 1,000 + 1,000 = 2,000
For 2 Race, 2 Musical, TU = 1,800 + 1,800 = 3,600
For 3 Race, 3 Musical, TU = 2,500 + 2,500 = 5,000
Since the last option gives him highest total utility, Neil will buy 3 race tickets & 3 musical tickets.