Assume that Eric uses his income to purchase 2 types of goods, a set dinner and...
Assume that Eric uses his income to purchase 2 types of goods, a
set dinner and a movie ticket.
Suppose that the marginal utility of a set dinner is 500 utils and
the cost is RM20 per set; while the
marginal utility of a movie ticket is 400 utils and the cost is
RM10 per ticket.
(i) Using the cardinal utility approach, determine whether Eric has
maximised his utility.
Explain. (6 marks)
(ii) Based on part (i), explain how Eric can maximise his
utility.
Homework Answers
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