Matilda is downloading music and videos from an online site. She is currently buying three music downloads that cost $3 each and two video downloads that also cost $3 each. The table below indicates what she reports as the marginal utility of the last music download and of the last video download in this combination of purchases.
|
Quantity
|
Price per Download
|
MU per download
|
|
Music downloads
|
3
|
$3
|
60
|
|
Video downloads
|
2
|
$3
|
45
|
As an assignment for her Microeconomics course, Matilda used the marginal utilities that she gave to her 3rd music download and her 2nd video download to complete the Experiment Tally Sheet below.
a. A consumer maximizes utility when the last dollar spent on any good generates the same satisfaction as the last dollar spent on every other good. Is Matilda maximizing her utility? Explain your answer.
b. Should Matilda consume one more video download, to move her closer to her optimum utility? Explain your answer.
c. Should Matilda consume one less music download and one more video download, to move her closer to her optimum utility? Explain your answer.
d. Should Matilda consume one more music download, to move her closer to her optimum utility? Explain your answer.