Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 7 - Consumer Choice: Utility Theory and Insights from Neuroscience - Exercises - 7.2 The Law of Demand and the Individual Demand Curve - Page 178: 2.2c

Answer

(iii)

Work Step by Step

MU per \$ is 32 at both c and f. The cost for rides and concerts equals \$100 at points c and f $(12×6)(14×2)=(72)+(28)=100✓ Since the equimarginal rule and affordability both apply, c and f represent the best affordable bundle.
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