Answer to Question #283197 in Microeconomics for Faizi

Question

Pete enjoys rock concerts and the opera. The table shows the utility he gets from each activity: Concerts Utility from Utility from per month rock concerts operas 1 120 200 2 100 160 3 80 120 4 60 80 5 40 40 6 20 0 Pete has a200 a month to spend on concerts. A rock concert ticket is a20, and an opera ticket is a40. How many rock concerts and how many operas does Pete attend?

Answer 1

Pete will attend 4 rock concerts and 3 operas.

The initial three operas give Pete more utility than even his first rock concert . The subsequent two rock concerts give him more utility than the opera. This gives a total of 5 tickets. Since he has 200 dollars to spend and he would have spend 180 dollars on three rock concerts and three opera, the remaining 20 dollars would them be spent on an additional rock concert.