Assume that Mohammad has $144 to spend on Soccer Games and Fishing Trips each month and that both goods must be purchased whole (no fractional units). Attending a soccer game costs $6 each, and fishing costs $30 per trip. Mohammad’s preferences for soccer and fishing are summarized by the following information:
1- Fill in the figures for marginal utility and marginal utility per dollar for both soccer and fishing.
2- Are these preferences consistent with the law of diminishing marginal utility? Explain briefly.
3- Given the budget of $144, what quantity of soccer games and what quantity of fishing trips will maximize Mohammad’s level of satisfaction? Explain briefly.
4- Now suppose the price of soccer game rises to $8. Which of the columns in the table must be recalculated? Do the required recalculations.
5- After the price change, how many soccer games and how many fishing trips will Mohammad purchase?
6- Draw the total utility for both soccer games and for the fishing trips.
Sample Solution