Suppose that firms are located in a circle on an island. You are given transportation costs, fixed costs, variable costs, and demand (assume that customers are spread evenly along the circle). If the distance around the island is 50 miles and there are two restaurants equally spaced on the island and each of 100 people are equally spaced around the island and eat a meal a day at a restaurant, what will be the average distance traveled to and from restaurants in a day's time?
A. 50 miles
B. 125 miles
C. 25 miles
D. 12.5 miles
Answer: D
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Taylor's marginal utility from watching movies and from eating out (in utils) is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20.MoviesPer MonthMarginal UtilityPer MovieDinners OutPer MonthMarginal UtilityPer Dinner160115025021403203120454100 Taylor's optimal combination of movies and eating out is:
A. 3 movies and 3 dinners. B. 4 movies and 3 dinners. C. 2 movies and 4 dinners. D. 3 movies and 4 dinners.