Mike spends all his income on films (F) and concerts (C). Films cost $10 and concerts cost $30. Mike’s preferences can be described by the utility function: U = F C and hence the marginal utility of films is C and the marginal utility of concerts is F. Which of the following bundle will Mike purchase? (Hint: You do not need to know income in $ amount. Answer the question using the tangency condition.) (a) Mike purchases 30 concerts and 10 films a month. (b) Mike purchases 10 concerts and 30 films a month. (c) Mike purchases 20 concerts and 20 films a month. (d) Mike purchases 5 concerts and 10 films a month.

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Chapter10: Consumer Choice Theory
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27. Mike spends all his income on films (F) and concerts (C). Films cost $10 and concerts
cost $30. Mike’s preferences can be described by the utility function: U = F C and hence the
marginal utility of films is C and the marginal utility of concerts is F. Which of the following
bundle will Mike purchase? (Hint: You do not need to know income in $ amount. Answer
the question using the tangency condition.)
(a) Mike purchases 30 concerts and 10 films a month.
(b) Mike purchases 10 concerts and 30 films a month.
(c) Mike purchases 20 concerts and 20 films a month.
(d) Mike purchases 5 concerts and 10 films a month.

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