Quantity of magazines Total utility from magazines Quantity of CDs Total utility
ID: 1193568 • Letter: Q
Question
Quantity of magazines
Total utility
from magazines
Quantity of CDs
Total utility
from CDs
0
0
0
0
1
240
1
500
2
400
2
950
3
520
3
1350
4
620
4
1650
5
680
5
1800
6
716
6
1850
7
736
7
1870
8
740
8
1875
6) The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10 and Jane's budget is $88. What is Jane's marginal utility per dollar spent on magazines at her consumer equilibrium?
A) 36 units
B) 15 units
C) 9 units
D) 5 units
Quantity of magazines
Total utility
from magazines
Quantity of CDs
Total utility
from CDs
0
0
0
0
1
240
1
500
2
400
2
950
3
520
3
1350
4
620
4
1650
5
680
5
1800
6
716
6
1850
7
736
7
1870
8
740
8
1875
Explanation / Answer
The consumer equilibrium is 7 magazines and 6 Cds with a budget constraint of $88.
Marginal Utility for magazines at consumer equilibrium = 736 - 716 = 20
Dollars spent on the 7th magazine = $4
Marginal Utility per dollar spent on magazines at consumer equilibrium = 20 / 4 = 5 units.