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?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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For the utility function above, if the
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?
Transcribed Image Text:a) 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?
6 O utils.
b) 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?
14
utils.
c) Would a rational consumer consume the eighth unit if it was free?
No
Transcribed Image Text: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
Expert Solution
Step 1
Marginal utility is the incremental/additional gain in total utility when one additional unit is consumed.
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