Economics: decision making?

Question by ChadD: Economics: decision making?
Assume you are bored and want to see a movie. Which of the following choices gives you a better
value: Spending $ 8 for a ticket at the multiplex that gives you $ 12 of enjoyment, or renting a DVD for $ 3 that gives
you $ 6 of enjoyment? Explain.

Best answer:

Answer by meg
It depends on how much money you have and how much you want things other than entertainment.
You can look at the two choices as a quantity of an enjoyment good ( 12 and 6) with a price (8 ,3) ( which has decreasing marginal utility)and construct a utiltiy function for enjoyment vs all the other goods that you could spend you money on. The maximize you utility with an income restraint.

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