Question

Based on his​ preferences, Bill is willing to trade 4 movie tickets for 1 ticket to a basketball game. If movie tickets cost ​$8 each and a ticket to the basketball game costs ​$30​, should Bill trade movie tickets for basketball​ tickets? Why or why​ not? Bill should

A. not trade movie tickets for basketball tickets because his marginal rate of substitution is less than the ratio of the price of a basketball ticket to the price of a movie ticket.
B. trade movie tickets for basketball tickets because his marginal utility per dollar spent on movie tickets is greater than his marginal utility per dollar spent on basketball tickets.
C. not trade movie tickets for basketball tickets because his marginal utility per dollar spent on movie tickets equals his marginal utility per dollar spent on basketball tickets.
D. trade movie tickets for basketball tickets because his marginal utility per dollar spent on movie tickets is less than his marginal utility per dollar spent on basketball tickets. Your answer is correct.
E. trade movie tickets for basketball tickets because his marginal rate of substitution equals the ratio of the price of a basketball ticket to the price of a movie ticket.

Answer 1

A.

Step-by-step explanation:

A. not trade movie tickets for basketball tickets because his amrginal rate of substitution is less than the ratio of the price of a basketball ticket to the price of a movie ticket.

y:4 movie tickets*$8=32

x:1 ticket basketball game=$30

y>x