For the utility function above, if the price of the good is $4, what is the marginal Utility per Dollar for the fourth unit consumed? For the utility function above, if the price of the good is $2, what is the marginal Utility per Dollar for the second unit consumed?

For the utility function above, if the price of the good is $4, what is the marginal Utility per Dollar for the fourth unit consumed? For the utility function above, if the price of the good is $2, what is the marginal Utility per Dollar for the second unit consumed?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 1.3P

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Question

For the utility function above, if the price of the good is $4, what is the marginal Utility per Dollar for the fourth unit consumed?

For the utility function above, if the price of the good is $2, what is the marginal Utility per Dollar for the second unit consumed?

Given the following diagram:
Diminishing Marginal Utility
L. TOTAL AND MARGINAL UTILITY
Reset
UTILITY CALCULATIONS
Total Utility
Quantity
Consumed
Total
Marginal
Utility
70
Utility
60
50
22
40
1
22
30
18
20
2
40
10
14
3
54
1
2 3
4
7
8
Quantity Consumed
10
Marginal Utility
64
20
10
70
2
1
2 3
4
6.
-10
72
-2
-20
7
70
Quantity Consumed
-6
Quantity Consumed
8
64
2
3
4
5
6
7
8
6.
4.
LO

Definition Definition Satisfaction derived from the consumption of an additional unit of any commodity.

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Marginal utility is the incremental/additional gain in total utility when one additional unit is consumed.

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