Choice

1: P

Choice

2: Q

Choice

3: R

Choice

4: S

Choice

5: T

4 T-shirts

and 0

movies

3 T-shirts

and 2

movies

2 T-shirts

and 4

movies

1 T-shirt

and 6

movies

0 T-shirts

and 8

movies

81 from 4 T-shirts + 0

from 0 movies = 81

–

63 from 3 T-shirts + 31

Loss of 18 from 1 less T-shirt, but gain of 31 from

from 0 movies = 94

2 more movies, for a net utility gain of 13

43 from 2 T-shirts + 58

Loss of 20 from 1 less T-shirt, but gain of 27 from

from 4 movies = 101

two more movies for a net utility gain of 7

22 from 1 T-shirt + 81

Loss of 21 from 1 less T-shirt, but gain of 23 from

from 6 movies = 103

two more movies, for a net utility gain of 2

0 from 0 T-shirts + 100

Loss of 22 from 1 less T-shirt, but gain of 19 from

from 8 movies = 100

two more movies, for a net utility loss of 3

–

Q is

preferred

over P

R is

preferred

over Q

S is

preferred

over R

S is

preferred

over T

TABLE 6.4 A Step-by-Step Approach to Maximizing Utility

WORK IT OUT
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