5. In this last problem, (Pete enjoys rockconcerts and the opera. The table show

Question

5.    In this last problem, (Pete enjoys rockconcerts and the opera. The table shows the marginal utilityhe gets from each activity. 1 120
200
2
100
160
3
80
120
4
60
80
5
40
40
6
20
0
. Pete has $200 a month to spend on concerts. The priceof a rock concert ticket is $20, and the price of an opera ticketis $40. How many rock concerts and how many operas does Peteattend?) if the price of an opera ticket decreases to $20, how manyrock concerts and operas will Pete attend?
1 120
200
2
100
160
3
80
120
4
60
80
5
40
40
6
20
0

Explanation / Answer

He will go to 4 rock concerts and 3 operas. This is becausehe gets at least as much or more utility at the opera than the rockconcerts for the first three opera performances he sees. Thenthe rock concerts take over for the next two levels until you getto both the opera and the rock concerts both having a utility of80. However, pete at this point only has 40 dollars left tospend and the two more rock concerts give him more combined utilitythen the lone opera. The second part is simple pete will go to 5 of both because theyeach equal 100 dollars total and the combined utility of 5 operasand 5 rock concerts is the most utility maximizing option. Negating the need to go to a sixth show of either that would veryminimally please him. I hope this helped.

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