chapter5demandthebenefitsideofthemarket-在線瀏覽
2024-12-02 21:58本頁面
【正文】 s will not violate her preferences. Therefore, she is rational. To explain her preferences in terms of marginal utility per dollar: More generally, even at twice the original price, the marginal utility per dollar of the last train trip may be higher than the corresponding ratio for any other good that Ann might consume, in which case she would be perfectly rational not to change the number of trips she takes. Construct a numerical example so that the observed phenomenon can be reconciled For simplicity, let’s assume: Originally, Ann takes 5 train trips per month at P=$5。 takes 10 meals per month at P=$1. Total budget to spend on trips and meals per month is $35. Given her total utility on the two activities, what is the optimal bination that maximizes her total utility? Compare the MU/$ of the two activities allocate each unit of the resource to the activity where its marginal utility per dollar is highest. According to her preferences, we would expect that the MU/$ of train is higher than the MU/$ of meal. According to her preferences, her marginal utility per dollar for the two activities will be as follow: Train (per month) MU (utils/trip) MU / $ 1 500 100 2 450 90 3 400 80 4 300 60 5 200 40 Meal (per month) MU (utils/meal) MU / $ 1 20 20 2 3 19 19 4 5 18 18 6 7 17 17 8 9 16 16 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 The optimal bination that costs $35 is, 5 train trips and 10 meals per month. The price of train tickets increases from $5 to $6. Price of meals and total budgets stay the same. What is the optimal bination after the price increases? Train (per month) MU (utils/trip) MU / $ 1 500 2 450 75 3 400 4 300 50 5 200 Meal (per month) MU (utils/meal) MU / $ 1 20 20 2 3 19 19 4 5 18 18 6 7 17 17 8 9 16 16 10 1 2 3 4 5 6 7 8 9 10 ?The optimal bination that costs $35 is 5 trains, 5 meals. (consumption of meals falls) ?The MU/$ of the last train trip is higher than the corresponding ratio for any other good that Ann might consume. ?She is rational not to change the number of trips. b) Explain why an increase in train travel might affect the amount she spends on restaurant meals. Ine Effect is observed through changes in purchasing power when price of a good increases, purchasing power of individual decreases ? Her total monthly spending is the same. ? The increase in price of ticket actually makes her poorer than before, decreases her purchasing power. ? The ine effect of the price increase is what leads to the reduction in the number of restaurant meals she eats. Chapter 5 Problem 8 8) Tom has a weekly allowance of $24, all of which he spends on pizza and movie rentals, whose prices are $6 per slice and $3 per rental, respectively. If slices of pizza and movie rentals are availab
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