Consider the figure to the right, and suppose that the initial point is A. Explain why a decrease in the price of each digital app from $3 to $2 results in a change in the marginal utilities of digital apps in a direction that is consistent with re-attainment of a new consumer optimum at point B. At A, the marginal utility per dollar spent on apps the marginal utility per dollar spent on any other item. When the price of apps falls from $3 to $2, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 6 to 7 the marginal utility of apps. Together, the price and quantity changes cause the marginal utility per dollar spent on apps to consistent with a new consumer optimum at B. Price per Unit ($ per digital app) 10- 9- 1- 0- 0 1 2 A B 3 4 Digital Apps per Period D 8 9 10 Q ON

Consider the figure to the right, and suppose that the initial point is A. Explain why a decrease in the price of each digital app from $3 to $2 results in a change in the marginal utilities of digital apps in a direction that is consistent with re-attainment of a new consumer optimum at point B. At A, the marginal utility per dollar spent on apps the marginal utility per dollar spent on any other item. When the price of apps falls from $3 to $2, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 6 to 7 the marginal utility of apps. Together, the price and quantity changes cause the marginal utility per dollar spent on apps to consistent with a new consumer optimum at B. Price per Unit ($ per digital app) 10- 9- 1- 0- 0 1 2 A B 3 4 Digital Apps per Period D 8 9 10 Q ON

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 8P

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Question 2
Consider the figure to the right, and suppose that the initial point is A. Explain why a decrease in the price of each digital app from $5 to $4 results in a change in the marginal utilities of digital apps in a direction that is consistent with re-attainment of a new consumer optimum at point B. At A, the marginal utility per dollar spent on apps the marginal utility per dollar spent on any other item. When the price of apps falls from $5 to $4, the marginal utility per dollar spent on apps The associated rise in the quantity of apps demanded from 4 to 5 the marginal utility of apps. Together, the price and quantity changes cause the marginal utility per dollar spent on apps to consistent with a new consumer optimum at B. Price per Unit ($ per digital app) 10- 9- ro LO 5- 3 2- 1- 0 2 A B 3 5 6 7 Digital Apps per Period D 8 19 10
The total utility schedule of Sharon is given below for the number of shoes she consumes. i. Calculate Sharon’s marginal utility schedule. ii. Plot a graph of total and marginal utility. iii. What is the maximum number of shoes that Sharon will consume? Explain Number of Shoes Total Utility Marginal Utility1 100 2 2003 2754 3255 3506 3607 3608 355 b. Assume that Mania has $1,200 per month to spend between dinners at a Japanese restaurant and evenings at Cru, a local bar. Assume that going to Cru costs $25 and eating at the restaurant costs $14. a. Draw Mania’s budget constraint with restaurants on the horizontal axis.b. Suppose…
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The total utility schedule of Sharon is given below for the number of shoes she consumes. i. Calculate Sharon’s marginal utility schedule. ii. Plot a graph of total and marginal utility.iii. What is the maximum number of shoes that Sharon will consume? Explain
True/False Marginal utility keeps falling with the each additional consumption of a good or service.