Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 5, Problem 6TY
To determine
Illustration of
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The table details the total utility that J.J. gets from going to see basketball and hockey games during a month. J.J. had $120 to spend. Calculate the marginal utility and the marginal utility per dollar spent for both basketball and hockey given that the price is $20 and $30 respectively. Based on your calculations:
how many basketball games would he attend?
how many hockey games would he attend?
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
The following table lists the utility that Steve receives from consuming oranges at $0.50 apiece.
What is the marginal utility of increasing consumption from two to three oranges?
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345
Chapter 5 Solutions
Economics: Principles and Policy (MindTap Course List)
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- The following table shows the total utility that Antonio receives from consuming different number of apples per week. What is his marginal utility from consuming the second apple? Quantity of Apples 01234 Total Utility 0 20 34 44 50 34 14 44 06 10arrow_forwardRamona is an asparagus farmer and the world asparagus market is perfectly competitive. The market price is $23 a bundle. Ramona sells 800 bundles a week and her marginal cost is $25 a bundle. The market price falls to $20 a bundle, and Ramona cuts her output to 500 bundles a week. Ramona's average variable cost and marginal cost fall to S20 a bundle. Ramona is A. not maximizing profit because she has cut her asparagus production O B. not maximizing profit because she is incurring an economic loss C. maximizing profit and she is incurring an economic loss O D. maximizing profit and she is making an economic profit E. not maximizing profit because marginal revenue does not equal marginal costarrow_forwardImagine, we are in ancient Greece. Praxilla lives in Athens and 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 first 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 cucumbers consumed. A poem costs three bronze coins, but a cucumber only costs one bronze coin. Praxilla has 18 bronze coins. 1. Sketch Praxilla’s 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…arrow_forward
- When consumers have a budget, their utility is maximized by buying a combination of goods such that the marginal utility per dollar is the same for all of these goods. This is because if this were not the case, it would mean that the consumer hadn't used up their entire budget. of their insatiability. if a consumer could get higher marginal utility from one good than from others, they would want to buy more of that good, and less of others. if a consumer could get higher marginal utility from one good than from others, they would want to buy less of that good, and more of others. it guarantees them some variety.arrow_forwardThe table below shows the total utility from consuming different quantities of tacos. Use the information below to find the Marginal Utility for each quantity. The marginal utility obtained by consuming the second taco is 9. (enter a number) Quantity Total Utility 0 1 2 3 4 5 (enter a number) The marginal utility obtained by consuming the fourth taco is 0. 0 110 185 245 290 295arrow_forwardGive a real-life example (from your daily life) that illustrates total utility rising as marginal utility declines.arrow_forward
- Steve allocates his budget of $24 per week among three goods. Use the following table of the marginal utilities for Good A, Good B, and Good C to answer the questions below: Q(A) MU(A) Q(B) MU(B) Q(C) MU(C) 1 50 1 75 1 25 2 40 2 60 2 20 3 30 3 40 3 15 4 20 4 30 4 10 5 15 5 20 5 7.5 If the price of A is $2, the price of B is $3, and the price of C is $1, how much of each will Daniel purchase in equilibrium? If the price of A rises to $4 while the other prices and Daniel's budget remain unchanged, how much of each will he purchase in equilibrium?arrow_forwardExplain the Marginal Utility Concept with example?arrow_forwardplease helparrow_forward
- Suppose that strawberries sell for $3 per basket. Jim is considering whether to buy zero, one, two, three or four baskets. On your own, create a plausible set of total and marginal utility numbers for the different quantities of strawberries and arrange them in a table. From your table, calculate how many baskets Jim would buyarrow_forwardComplete the following tablearrow_forward
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