# Marginal Utility and Budget Constraints

Feb 3rd, 2012
Studypool Tutor
Alabama State University
Price: \$5 USD

Tutor description

The laws of diminishing marginal utility are obeyed in the table and graph illustrations, as more units of one item are purchased the level of satisfaction derived from the procurement of that commodity decreases. As more books are procured the level of satisfaction decreases from 6.25 to a lesser value, and as more movies are procured the level of satisfaction derived decreases from 1.1 to a less value

Word Count: 328
Showing Page: 1/4
Marginal Utility and Budget Constraints PaperStudent's NameProfessor's NameAffiliationDateMarginal Utility and Budget ConstraintsBooksTotal UtilityQuantityMarginal UtilityMarginal Utility per \$50150 6.25802303.751003202.51104101.25MovieTotal UtilityQuantityMarginal UtilityMarginal Utility per \$221221.1422201523100.557450.25The Formula for the relationship between books and movies can be expressed as a linear function with independent variable X and dependent variable YLet;X= the quantity of books Y=the quantity of moviesM=consumer's IncomePX=the price of booksPY=the price of moviesHence: M=\$60PX=\$8PY=\$20The linear equation is given by:M=PX*X+PY*Y\$60=\$8X+\$20YThus;Y=-0.4X+3Plotting this on a graph we need four pointsAssume the following values for X and YX0135Y32.61.80 The graph can be drawn as follows:The above graph represents the total consumption of the \$60 income on books and movies depending on the consumer's levels of utility.1. The maximization of consumer satisfaction will be realized if 3 movies are purchases and no books are procures, or the consumer can purchase 5 b

## Review from student

Studypool Student
" Goes above and beyond expectations ! "

1821 tutors are online

### Other Documents

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors