Question

When presented with two choices for afternoon entertainment, Riana has a clear favorite: going to the movies provides her with 40 utils, while attending a baseball game provides 32 utils. The price for both tickets is $5, causing Riana to choose the movies. What price for a baseball game ticket would cause Riana to choose that instead?

a. $3.99
b. $4.00
c. $4.01
d. $1.60

Answer 1

$4

Step-by-step explanation:

Given:

Marginal utility of movie = 40

Marginal utility of baseball = 32

Price of ticket = $5

Find:

Price of baseball match ticket to change her mind.

Computation:

Per dollar utility of movie = 40 / 5

Per dollar utility of movie = 8

Price of baseball match ticket to change her mind = Marginal utility of baseball / Per dollar utility of movie

Price of baseball match ticket to change her mind = 32 / 8

Price of baseball match ticket to change her mind = $4