The relationship between the diminishing
Concept Introduction:
Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.
Explanation of Solution
The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.
Some restrictions that restaurant can impose on customers to make a profit are as follows:
(a) The customer cannot share his plates with other customers.
(b) Time of consumption must be limited.
(c) No takeaways are allowed in the bags.
Want to see more full solutions like this?
Chapter 6 Solutions
Econ Micro (book Only)
- Question 18 An increase in the price of product A will: cause utility-maximizing consumers to buy more of A. decrease the marginal utility per dollar spent on A. not affect the marginal utility per dollar spent on A. increase the marginal utility per dollar spent on A.arrow_forwardQ4) 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?arrow_forwardWhich of the following defines marginal utility? a. the maximum amount of satisfaction from consuming a product b. the change in total utility divided by the price of a product c. the total satisfaction received from consuming as much of the product that is available for consumption d. the additional satisfaction received from consuming one more unit of a productarrow_forward
- QUESTION 14 If two goods are substitutes, then a(n) A increase in the demand for one of them will cause its price to fall B. increase the supply of one of them will cause its price to rise C. increase in the price of one of them will cause the demand for the other to increase D. increase in the price of one of them will cause the supply of the other to increase decrease in the price of one of them will cause the demand for the other to increase E. QUESTION 15 If the supply of coffee falls due to bad weather conditions in coffee-exporting countries, then the A price and quantity will rise B. price and quantity will fall C. price will fall and quantity will rise price will rise and quantity will fall quantity will fall, but price may rise or fallarrow_forward(Law of Diminishing Marginal Utility) Complete each of the following sentences: a. your tastes determine the______________you derive from consuming a particular good. b. _________________utility is the change in ____________________ utility resulting from a(n) ______________ change in the consumption of a good. c. As long as marginal utility is positive, total utility is ______________ d. The law of diminishing marginal utility states that as an individual consumes more of a good during a given time period, other things constant, total utility ______________________arrow_forward(Table: Marginal Utility per Dollar of Twix) Use Table: Marginal Utility per Dollar of Twix. The price of Twix is $2 per bar. The marginal utility per dollar of the second bar of Twix is: Table: Marginal Utility per Dollar of Twix Bars Quantity of Twix bars Total utility 0 1 2 3 4 5 5. 16. 10. 2. 0 6 10 13 15 16arrow_forward
- please explain the theory of marginal utility. Please include a particular product or service you use and how marginal utility applies. Search entries or author please l want new onearrow_forwardSubject: ecarrow_forwardIndicate the answer choice that best completes the statement or answers the question. 1. (Figure: Demand for jazz shows) The graph shows Jayden's monthly demand curve for live music at a small, local venue. Price per show ($) $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Demand 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Quantity of shows If Jayden currently attends six shows per month, what is probably TRUE? a. The price of a concert ticket is between $9 and $12. b. Jayden does not have enough income to go to more than six shows per month. c. Each concert provides Jayden with the same marginal benefit. d. If the price rose to $18, Jayden would not attend any concerts. Page 1arrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc