Question

Prashanth decides to buy a $75 ticket to a particular New York professional hockey game rather than a $50 ticket for a particular Broadway play. We can conclude that Prashanth:
A. is relatively unappreciative of the arts.
B. obtains more marginal utility from the play than from the hockey game.
C. has a higher "marginal utility-to-price ratio" for the hockey game than for the play.
D. has recently attended several other Broadway plays.

Answer 1

Has a higher "marginal utility-to-price ratio" for the hockey game than for the play.

Thus, the correct option is C.

What is marginal utility?

Economists utilize the idea of marginal utility to estimate the quantity of a good that consumers will buy.

Marginal utility is the enjoyment a consumer gains from having one more unit of a good or service.

On the other hand, when one more unit is used and the overall utility decreases, negative marginal utility results.

When the overall utility is increased by the consumption of an additional item, positive marginal utility occurs.

The concept of marginal utility is helpful in describing how consumers choose products and services to maximize their financial resources.

In general, as long as the marginal benefit exceeds the marginal cost, consumers will keep consuming more of a good.

Learn more about marginal utility, here

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