AP® Microeconomics · Free response

A consumer with a budget: marginal utility per dollar, the best bundle, a larger budget and a sunk cost

write it first, then score yourself point by point

Short free-response question · four-function calculator · 5 points · about 12 minutes

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The question

Name: ______________________   Date: ____________   A consumer with a budget: marginal utility per dollar, the best bundle, a larger budget and a sunk cost (5 points)

Jonah has $30 to spend this month on used paperback books, which cost $5 each, and movie tickets, which cost $10 each. He spends the whole $30. The table shows the marginal utility (in utils) he gets from each book and each ticket. Earlier in the year he paid a $15 fee, which cannot be refunded, to join a bookstore club.

Data

Jonah's marginal utility

Marginal utility of each paperback ($5) and each movie ticket ($10), in utils (invented data for practice)
UnitMU of paperbacksMU of movie tickets
1st50120
2nd4080
3rd3050
4th20

  1. (A) Calculate Jonah's marginal utility per dollar from his second movie ticket. Show your work. [1 point]

  2. (B) Identify the combination of paperbacks and movie tickets that maximizes Jonah's total utility with his $30, and explain using marginal utility per dollar. [2 points]

  3. (C) Next month Jonah has $35 to spend, and the prices do not change. Identify the combination of paperbacks and movie tickets that now maximizes his total utility. [1 point]

  4. (D) Explain whether the $15 club fee Jonah paid earlier changes the combination that maximizes his utility this month. [1 point]