Units 1 2 3 4 5 Marginal Utility 10 8 Toffee (bars) 5 3 1 0 0 Total Utility 10 18 23 26 27 27 27 Cashews (bags) Marginal Utility 12 10 7 5 2 Total Utility 12 22 29 34 1 0 36 37 37 6 7 es of toffee bars and bags of cashews are both $3 and this consumer has $9 per week to spend on these two snacks, how many of each will he/she purchase to maximize utility? offee bars and 5 bags of cashews offee bars and 3 bags of cashews offee bar and 2 bags of cashews offee bars and 1 bag of cashews offee bars and 7 bags of cashews

Units 1 2 3 4 5 Marginal Utility 10 8 Toffee (bars) 5 3 1 0 0 Total Utility 10 18 23 26 27 27 27 Cashews (bags) Marginal Utility 12 10 7 5 2 Total Utility 12 22 29 34 1 0 36 37 37 6 7 es of toffee bars and bags of cashews are both $3 and this consumer has $9 per week to spend on these two snacks, how many of each will he/she purchase to maximize utility? offee bars and 5 bags of cashews offee bars and 3 bags of cashews offee bar and 2 bags of cashews offee bars and 1 bag of cashews offee bars and 7 bags of cashews

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 4SQP

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Similar questions

Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a roundâ€”trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.
Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
Would you expect total utility to rise or fall with additional consumption of a good? Why?
Is it possible for total utility to increase while marginal utility diminishes? Explain.
What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice? Explain why, if this rule does not hold, the choice cannot be utility-maximizing
A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
Table 6.1 Pretzels Marginal Utility 1 30 20 3 5 4 Refer to Table 6.1, which shows the marginal utility of each additional unit of pretzel for a consumer. The first column of the table shows the number of pretzels consumed in a day, and the second column of the table shows the marginal utility of each additional unit of pretzel. The total utility derived from the consumption of three pretzels is units. O a. 5 O b. 55 Oc. 15 Od. 57 O e. 70
QUESTION 3 Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately? O MU/P is consistently greater at all-you-can-eat restaurants. O Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel the need to consume greater volume of food. O People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility. O Once the all-you-can-eat meal purchased, consumers view additional trips back to the buffet as having a price of zero. QUESTION 4 Total utility is best defined as the O additional satisfaction received from consuming one more unit of a product. O total satisfaction received from consuming a given amount of a product. O maximum amount of satisfaction from consuming a product. O change in marginal utility multiplied by the price of a product.
Mylie’s total utility from singing the same song over andover is 50 utils after one repetition, 90 utils after tworepetitions, 70 utils after three repetitions, 20 utils afterfour repetitions, 250 utils after five repetitions, and 2200utils after six repetitions. Write down her marginal utilityfor each repetition. Once Mylie’s total utility beginsto decrease, does each additional singing of the songhurt more than the previous one or less than the previousone?
John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke, or does he show increasing marginal utility for Coke? Supposethat John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke?
Evelyn loves to eat chocolate. However, every piece of chocolate that Evelyn eats provides her with less total utility. What can we conclude about Evelyn's utility from this information? O Her marginal utility is negative. Her marginal utility is constant. O Her marginal utility is diminishing. Her marginal utility is increasing.