Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 10, Problem 11P
To determine
The
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Suppose you consume 3 pounds of beef and 5 pounds of pork per month. The price of beef is $1.50 per pound , and pork is $2.00 per pound. Assuming you have studied economics and achieved consumer equilibrium, what is the ratio of the marginal utility of beef for the marginal utility of pork?
Suppose it is “All You Can Eat” Night at your favorite restaurant. Once you’ve paid $69.95 for your meal, how do you determine how many helpings to consume? Should you continue eating until your food consumption has yielded $69.95 worth of satisfaction? What happens to the marginal utility from successive helpings as consumption increases?
Ari intends to purchase a new car and has narrowed it down to a Dodge Ram truck or a Toyota Camry. A Dodge Ram truck
costs $55000 while a Toyota Camry costs $20000. The utility that Ari will get from Dodge Ram truck is 12500 while Toyota
Camry will generate a utility of 2500.
Note: A purchase generating utility tells us the marginal utility of the good.
What is the Marginal Utility per Dollar for Dodge Ram truck?
What is the Marginal Utility per Dollar for Toyota Camry?
Will Ari be better off buying a Dodge Ram truck or a Toyota Camry?
ODodge Ram truck
OToyota Camry
A
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Similar questions
- If at a quantity consumed of 1 unit, total utility equals 25 and marginal utility equals 25, and at a quantity consumed of 2 units, total utility is unknown and marginal utility is 20, and at a quantity consumed of 3 units, total utility is 57 and marginal utility is unknown, what is marginal utility of the third unit?arrow_forwardGive a real-life example (from your daily life) that illustrates total utility rising as marginal utility declines.arrow_forwardou are having lunch at an all-you-can-eat buffet. If you are rational, what should be your marginal utility from the last morsel of food you swallow?Marginal utility from the last morsel of food you swallow should be .arrow_forward
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