Suppose Jen and Mike Have Initial Distributions of Movie Theater

question 33

Multiple Choice

Suppose Jen and Mike have initial distributions of movie theater passes and gallons of gas such that Jen's marginal utility of movie passes and gasoline are both 5,while Mike's marginal utility of movie passes and gasoline are 8 and 1 respectively.If movie theater passes are $9 each and gasoline is $3 per gallon,which of the following should occur?

• A)Jen should trade gasoline for movie passes until her marginal utilities for both are 3 and 1 respectively.
• B)Mike should trade movie passes for gallons of gasoline until his marginal utilities for each is 2 and 3 respectively.
• C)Mike should trade gasoline to Jen for movie passes until the marginal utilities of both goods are the same between the two of them,and their marginal rates of substitution of movie passes for gasoline are both equal to 3.
• D)Mike should trade gasoline to Jen for movie passes until the marginal utility of gasoline for each is three times the marginal utility of movie passes for each.

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