Question: Faith enjoys classical CDs and travel books and spends N$75 a month on them. Table 2 shows the utility she gets from each good.
Faith enjoys classical CDs and travel books and spends N$75 a month on them. Table 2 shows the utility she gets from each good. Table 2 Utility schedule Total utility classical CDS (a) (b) (c) 0 90 126 Marginal utility classical CDs 20 12 MU/P classical CDs Quantity per month 0 1 2 3 4 Total utility travel books 0 120 148 MU/P Marginal utility travel travel books books 16 4 Copy Table 2 into your answer sheet and complete the columns for total utility (TU), marginal utility (MU) and MU/P. You may use the abbreviations for column headings. (0.5 x 16 = 8 marks) If the price of a classical CD is N$15 each and the price of a travel book is N$15 each, how does Faith spend the N$75 every month? (0.5 x 2 = 1 mark) If you study the two marginal utility columns, what do they tell you about Faith's preferences for the two goods? (1 mark)
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