Howt is total utility maximized in Economics?
The marginal utility of good A is 4 utils and its price is $2.The marginal utility of good B is 6 utils and its price is $1. Is the individual consumer maximizing total utility if she spends a total of $3 by buying one unit of each good? If not, how can more utility be obtained?
Howt is total utility maximized in Economics?
The marginal utility of good A is 4 utils and its price is $2.The marginal utility of good B is 6 utils and its price is $1. Is the individual consumer maximizing total utility if she spends a total of $3 by buying one unit of each good? If not, how can more utility be obtained?
For unlimited access to Homework Help, a Homework+ subscription is required.
Related textbook solutions
Related questions
1. Total and marginal utility
Alyssa enjoys eating ice cream cones. The following table contains information on Alyssa's utility from ice cream each week.
Fill in the two missing cells of the table.
Ice Cream |
Total Utility |
Marginal Utility |
---|---|---|
(Cones) |
(Utils) |
(Utils per cone) |
0 | 0 | |
60 | ||
1 | 60 | |
50 | ||
2 | ||
40 | ||
3 | 150 | |
4 | 180 | |
20 | ||
5 | 200 | |
10 | ||
6 | 210 | |
On the following graph, use the purple points (diamonds symbol) to plot Alyssa's total utility (TU) curve if she consumes zero, one, two, three, four, five, or six cones of ice cream per week.
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
0123456240216192168145120967248250TOTAL UTILITY (Utils)ICE CREAM (Cones)
On the following graph, use the blue points (circle symbol) to plot Alyssa's marginal utility (MU) curve from consuming her first six cones of ice cream.
012345680706050403020100MARGINAL UTILITY (Utils)ICE CREAM (Cones)
For Alyssa, increasing her consumption of ice cream results in marginal utility.
When deciding consumption levels of more than one good, the utility-maximizing rule states that you are maximizing utility when
the marginal utility o two goods are equal | ||
the marginal utility of two goods are zero | ||
the ratio of marginal utility to price of two goods is zero | ||
the ratio of marginal utility to price for the two goods are equal |
10 points
QUESTION 2
My brother says the law of diminishing marginal utility is nonsense because he is way happier after his sixth beer than after his first one. Pick the best response.
He has a point, maybe this is something behavioral economists should take a look at. | ||
True, but marginal utility refers only to the utility gained (or lost) by drinking that last beer, not to his total utility | ||
There are always exceptions, but in general this law will hold. | ||
True, but the law of diminishing marginal utility is really just saying that eventually he will prefer a glass of wine to another beer. |
10 points
QUESTION 3
Frank spends $75 on 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers cost $2.50 each. Suppose that his marginal utility from the final magazine is 10 utils while his marginal utility from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should:
Reallocate spending from magazines to newspapers | ||
Reallocate spending from newspapers to magazines | ||
Be satisfied because he is already maximizing his total utility | ||
None of the above |
10 points
QUESTION 4
Marginal utility can be:
Positive, negative, or zero | ||
Decreasing but not negative | ||
Positive or negative, but not zero | ||
Positive, but not negative |
10 points
QUESTION 5
In economics, a product provides utility if it:
is useful | ||||||||||||||
violates the law of demand | ||||||||||||||
takes more and more resources to produce successive units of it | ||||||||||||||
satisfies consumer wants Which of the following is true of an indifference curve?
|