Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn

In Exhibit 6-4, assume the Multiplex tickets cost $6 each, video rentals cost $2 each, and bags of popcorn cost $1 each. Suppose the consumer has $12 per week to spend on multiplex tickets, video rentals, and popcorn. What combination of goods will give the consumer the most utility?
A) 1 movie, 3 videos, and no popcorn.
B) 1 movie, 2 videos, and 2 bags of popcorn.
C) 1 movie, 1 video, and 4 bags of popcorn.
D) 2 movies, no videos, and no bags of popcorn.

Question

Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn

In Exhibit 6-4, assume the Multiplex tickets cost $6 each, video rentals cost $2 each, and bags of popcorn cost $1 each. Suppose the consumer has $12 per week to spend on multiplex tickets, video rentals, and popcorn. What combination of goods will give the consumer the most utility?
A) 1 movie, 3 videos, and no popcorn. 
B) 1 movie, 2 videos, and 2 bags of popcorn. 
C) 1 movie, 1 video, and 4 bags of popcorn. 
D) 2 movies, no videos, and no bags of popcorn.

Quizplus · Accepted Answer

To maximize utility with a budget of $12, we must find the bundle of goods that maximizes total utility while staying within our budget constraint. Looking at Exhibit 6-4, we can see that the highest point on the budget constraint line intersects the highest attainable total utility level at point B, which corresponds to 1 movie, 2 videos, and 2 bags of popcorn. This combination gives the consumer 20 units of total utility (12 from the movie, 6 from the videos, and 2 from the popcorn) and uses up the entire $12 budget. Therefore, B is the best choice for maximizing utility with a budget of $12.

Exhibit 6-4 Total Utility for Multiplex Tickets, Video Rentals, and Popcorn