Question

• Describe two goods, services, or activities that you currently enjoy but your marginal utility per dollar (or per unit of time) for the two goods is not equal.
• Be specific in describing these two goods, services, or activities.
• Use the rational spending rule to describe how you can re-arrange your spending (or time) in order to maximize your utility.
• You can simply state that you should spend more money (or time) on one thing and less money (or time) on the other.
• Describe what will happen to your marginal utility for each good (or activity) after you reallocate your spending (or time).

Answer 1

Ans.

Two goods, services, or activities that we currently enjoy but our marginal utility per dollar (or per unit of time) for the two goods is not equal are :

Good X- Movie = Spend 70 percent of money

Good Y- Paying Game = Spend 30 percent of money

A good initial phase in deciding how a purchaser will choose to allot their salary is knowing the fulfillment they get from a good. Be that as it may, before the ideal add up to purchase of any good the cost should likewise be thought of. As such, what is the "blast per buck" that a purchaser will get from the good?

We can decide the utility a purchaser gets utilizing the marginal utility per dollar spent, or MU/$.

To decide the MU/$, we partition the marginal utility a customer gets at a specific degree of utilization by the cost of the good.

To maximise the utility the consumer should spend more money on X and and less money on the other y good.

We can describe the utility function as u(x,y) = 0.7x+0.3y.