ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Textbook Question
Chapter 14, Problem 2.4P
(Search with imperfect Information) The following questions concern the accompanying graph.
a. Identify the two curves shown on the graph, and explain their upward or downward slopes.
b. Why does curve A intersect the horizontal axis?
c. What is the significance of quantity d?
d. What does e represent?
e. How would the optimal quantity of information change if the marginal benefit of information increased—that is, if the marginal benefit curve shifted upward?
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Q4) Marginal Utility
Use the table to calculate then draw marginal utility, show your calculations, graph, and then
answer two questions.
Popcorn
Consumption
0
First box
Second box
Third box
Fourth box
Fifth box
Sixth box
Total
Utility
0
20
35
44
49
50
40
a. With which box of popcorn does marginal utility first diminish?
b. With which box does marginal utility become negative?
question # 1
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