Soccer | TU | MU | MU/P | Fishing | TU | MU | MU/P |
1 | 28 | 28 | 4.67 | 1 | 150 | 150 | 5 |
2 | 46 | 18 | 3 | 2 | 270 | 120 | 4 |
3 | 62 | 16 | 2.67 | 3 | 360 | 90 | 3 |
4 | 74 | 12 | 2 | 4 | 420 | 60 | 2 |
5 | 80 | 6 | 1 | 5 | 450 | 30 | 1 |
6 | 84 | 4 | 0.67 | 6 | 470 | 20 | 0.67 |
7 | 86 | 2 | 0.33 | 7 | 480 | 10 | 0.33 |
2) As per the law of Diminishing marginal utility, the utility from additional units keeps decreasing so the preferences are consistent with the law.
3) The utility is maximized where MU/P for both goods are equal to one another
so, with the given budget, he will purchase 4 units of both goods
4) When the price of soccer games increases to 8, the MU/P for soccer needs to be recalculated
Soccer | TU | MU | MU/P |
1 | 28 | 28 | 3.5 |
2 | 46 | 18 | 2.25 |
3 | 62 | 16 | 2 |
4 | 74 | 12 | 1.5 |
5 | 80 | 6 | 0.75 |
6 | 84 | 4 | 0.5 |
7 | 86 | 2 | 0.25 |
As per HOMEWORKLIB RULES, first four parts are answered
Practice For this problem, assume that Mohammad has $144 to spend on Soccer Games and Fishing...