A consumer has a utility function for cable movies given by the following function: U=40X-(16/3)X, for...

 

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A consumer has a utility function for cable movies given by the following function: U=40X-(16/3)X, for X ≤ 25 (and U=0 beyond X = 25) where X is the number of cable movies viewed per month and U is measured in dollars. through 11 concern this consumer. If the price of pay-per-view cable movies is set at $8 per movie, the number of cable movies purchased by this consumer each month will be: A) 0 F) 9 B) 2 G) 10 A) SO F) $216G) $248 B) $72 C) 3 H) 12 C) $144 D) $199 If, instead, the price of pay-per-view cable movies is set at $16 per movie, the consumer surplus gained by this consumer each month through purchasing cable movies (to the nearest dollar) will be: H) $2611) $284 D) 6 1) 16 A) SO B) $72 F) $216 G) $248 H) $261 I) $284 E) 8 C) $144 D) $199 E) $212 J) 18 E) $212 J) none of the above Imagine that the cable company is trying to boost sales. It offers this consumer the following alternative to a price of $16 per movie: the consumer would pay no per movie fee, but instead would pay a monthly access charge that would permit the consumer to view as many movies as he or she liked, at no additional charge. The maximum monthly access charge that this consumer would be willing to pay (to the nearest dollar, as an alternative to the $16 per movie fee) would be: J) none of the above A consumer has a utility function for cable movies given by the following function: U=40X-(16/3)X, for X ≤ 25 (and U=0 beyond X = 25) where X is the number of cable movies viewed per month and U is measured in dollars. through 11 concern this consumer. If the price of pay-per-view cable movies is set at $8 per movie, the number of cable movies purchased by this consumer each month will be: A) 0 F) 9 B) 2 G) 10 A) SO F) $216G) $248 B) $72 C) 3 H) 12 C) $144 D) $199 If, instead, the price of pay-per-view cable movies is set at $16 per movie, the consumer surplus gained by this consumer each month through purchasing cable movies (to the nearest dollar) will be: H) $2611) $284 D) 6 1) 16 A) SO B) $72 F) $216 G) $248 H) $261 I) $284 E) 8 C) $144 D) $199 E) $212 J) 18 E) $212 J) none of the above Imagine that the cable company is trying to boost sales. It offers this consumer the following alternative to a price of $16 per movie: the consumer would pay no per movie fee, but instead would pay a monthly access charge that would permit the consumer to view as many movies as he or she liked, at no additional charge. The maximum monthly access charge that this consumer would be willing to pay (to the nearest dollar, as an alternative to the $16 per movie fee) would be: J) none of the above

Answer rating: 100% (QA)

To determine the number of cable movies purchased by the consumer at a price of 8 per movie we need to find the quantity of X that maximizes the utili... View the full answer