![rozlynnv22](/avatars/38037.jpg)
rozlynnv22
21.01.2021 •
Business
The table below shows the marginal utilities in utils that Sarah derives from consuming two goods, snacks, and movies.
Quantity of Snacks Marginal Utility of Snacks Quantity of Movies Marginal Utility of Movies
0 - 0 -
1 20 1 50
2 18 2 35
3 15 3 24
4 12 4 20
5 10 5 15
6 8 6 10
Sarah has a limited weekly income of $50, and she spends it all on snacks and movies. Assume the price of snacks is $5 per unit, the price of a movie ticket is $10, and Sarah is a utility-maximizing consumer.
(a) Would Sarah be able to consume 3 snacks and 5 movies? Explain.
(b) How many snacks and movies will Sarah consume to maximize her utility? Explain.
(c) Calculate the total utility Sarah will receive from consuming the utility-maximizing combination of snacks and movies indicated in your answer in part (a). Show your work.
(d) Suppose Sarah's income increases to $60.
(i) What will happen to the marginal utility per dollar spent on movies?
(ii) Will Sarah be better off buying two more snacks or one more movie ticket? Explain.
Solved
Show answers
More tips
- F Food and Cooking Which Calamari Salad is the Most Delicious?...
- S Style and Beauty How are artificial nails removed?...
- S Style and Beauty Secrets of Tying a Pareo: 5 Ways...
- F Food and Cooking Everything You Need to Know About Pasta...
- C Computers and Internet How to Choose a Monitor?...
- H Horoscopes, Magic, Divination Where Did Tarot Cards Come From?...
- S Style and Beauty How to Make Your Lips Fuller? Ideas and Tips for Beautiful Lips...
- C Computers and Internet How to Learn to Type Fast?...
Answers on questions: Business
- B Business CWN Company uses a job order costing system and last period incurred $80,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will...
- B Business One major global nonprofit organization that empowers people to create open-resource materials that can be shared or reused is called Commons....
- B Business A relationship that requires maintenance of a high degree of fidelity and loyalty to the interests of the principal, whether or not the adjuster is a direct employee is defined...
- B Business amison s gross tax liability is $8,250. Jamison had $2,100 of available credits and he had $4,250 of taxes withheld by his employer. What are Jamison s taxes due (or taxes refunded)...
- B Business Bob has been a model employee all year except for the last two to three weeks; yet, Bob s ratings on his performance appraisal reflect his performance during this last two-week...
- B Business The Sisyphean Company has a bond outstanding with a face value of $5000 that reaches maturity in 8 years. The bond certificate indicates that the stated coupon rate for this...
- B Business Assume that the reserve requirement is 20 percent. If a bank initially has no excess reserves and $10,000 cash is deposited in the bank, the maximum amount by which this bank...
- B Business An economy s production function has the constant-returns-to-scale property. If the economy s labor force doubled and all other inputs stayed the same, then real GDP would...
- B Business Canada Company had the following operating data for the year for its computer division: sales, $650,000; contribution margin, $140,000; total fixed costs (controllable), $100,000;...
- B Business Darg s team just had a research breakthrough. They ll need several thousands of dollars to complete the project. Darg has called a series of meetings in which he s promoting...
Ответ:
(a) No, Sarah would not be able to consume 3 snacks and 5 movies.
(b) Sarah will maximize her utility.
(c) The total utility Sarah will receive is 174 utils.
(d(i)) The marginal utility per dollar spent on movies will fall from 1.50 utils to 1.00 utils.
(d(ii)) Sarah will not be better off if she buys two more snacks or one more movie ticket.
Explanation:
Note: See the attached excel file for the calculation of marginal utility per dollar of Snacks and Movies.
(a) Would Sarah be able to consume 3 snacks and 5 movies? Explain.
No, because the total expenses would $65 would be greater than her weekly income of $50.
That is, if Sarah consumes 3 snacks and 5 movies, her total expenses would be:
Total expenses = (Units of snacks * Price of snacks) + (Units of movies * Price of movies) = (3 * $5) + (5 * $10) = $65.
Since the total expenses would $65 would be greater than her weekly income of $50, Sarah would not be able to consume 3 snacks and 5 movies.
(b) How many snacks and movies will Sarah consume to maximize her utility? Explain.
Sarah will maximize her utility at the point where marginal utility per dollar of Snacks is equal to the marginal utility per dollar of Movies. That is, where the following condition holds:
Marginal Utility of Snacks / Price of Snacks = Marginal Utility of Movies / Price of Movies
In the attached excel file, the above condition holds where Sarah consumes 4 snacks and 3 movies. At this point (see the red color in the attached excel file), we have:
Marginal Utility of Snacks / Price of Snacks = Marginal Utility of Movies / Price of Movies = 2.40
Therefore, Sarah will maximize her utility when she consumes 4 snacks and 3 movies. Because at this point, marginal utility per dollar of Snacks is equal to the marginal utility per dollar of Movies which is equal to 2.40.
(c) Calculate the total utility Sarah will receive from consuming the utility-maximizing combination of snacks and movies indicated in your answer in part (a). Show your work.
Total utility Sarah will receive from consuming the utility-maximizing combination of snacks and movies is the addition of the total utility from consuming utility maximizing quantities of the two goods.
The total utility from consuming a utility maximizing quantity of one good is the addition of the marginal utility from the first unit up to the utility maximizing units. From the attached excel file, we have:
Total utility from consuming utility maximizing quantity of Snacks = 20 + 18 + 15 + 12 = 65 utils
Total utility from consuming utility maximizing quantity of Movies = 50 + 35 + 24 = 109 utils
Therefore, we have:
Total utility from consuming the utility-maximizing combination of snacks and movies = 65 + 109 = 174 utils
(d(i)) Suppose Sarah's income increases to $60. What will happen to the marginal utility per dollar spent on movies?
To determine this, we assume that Sarah spends all her weekly income on movies alone. Therefore, we have:
Number of movies tickets when weekly income is $50 = $50 / Price of movie ticket = $50 / 10 = 5
Number of movies tickets when weekly income is $60 = $60 / Price of movie ticket = $60 / 10 = 6
Marginal utility per dollar spent on movies when weekly income is $50 = Marginal utility when 5 tickets is bought / Price of movie ticket = 15 / 10 = 1.50 utils
Marginal utility per dollar spent on movies when weekly income is $60 = Marginal utility when 6 tickets is bought / Price of movie ticket = 10 / 10 = 1.00 utils
Therefore, the marginal utility per dollar spent on movies will fall from 1.50 utils to 1.00 utils.
(d(ii)) Suppose Sarah's income increases to $60. Will Sarah be better off buying two more snacks or one more movie ticket? Explain.
If Sarah buys two snacks
From the attached excel file, this makes the total unit of snacks to increase from 4 to 6. This makes the marginal utility per dollar spent on snacks to fall from 2.40 to 1.60 while the marginal utility per dollar spent on movies still remains at 2.40.
This implies that Sarah will not be better off if she buys two more snacks because she is not maximizing her utility as the marginal utility per dollar spent on snacks of 1.60 is not equal to the marginal utility per dollar spent on movies of 2.40.
If Sarah buys one more movie ticket
From the attached excel file, this makes the total unit of movie ticket to increase from 3 to 4. This makes the marginal utility per dollar spent on movies to fall from 2.40 to 2.00 while the marginal utility per dollar spent on movies still remains at 2.40.
This implies that Sarah will not be better off if she buys one more movie ticket because she is not maximizing her utility as the marginal utility per dollar spent on snacks of 2.40 is not equal to the marginal utility per dollar spent on movies of 2.00.
Ответ:
Bailey has a taxable short-term capital gain of the amount of $350, but no deductible loss for the car.
Explanation:
Based on the information given In a situation where Bailey purchased the new game system for the amount of $600 in which it was sold for the amount of $950. Which means that the taxable nature of these transactions is that she has a TAXABLE SHORT-TERM CAPITAL GAIN of the amount of $350, which is calculated as ($950-$600) while on the other hand their won't be any deductible loss amount for the car.