1. What is the difference between ordinal utility and cardinal utility? Explain why the assumption of cardinal utility is not needed in order to rank consumer choices!
Q: Text: Consider a consumer whose preferences are characterized by the utility function u(x1,x2) = In…
A: Indifference curve shows different combination of two goods which gives exactly same level of…
Q: 5. Explain how consumer equilibrium is reached using marginal utility analysis.
A: In economics, utility is seen as a measure of happiness or satisfaction generated from the…
Q: 1. If utility can be measured in some way, it is called utility. 2. State the law of diminishing…
A: Note : Since the question holds more than three subparts, we will answer first three subparts as per…
Q: Explain consumer equilibrium with the help of indifference curve. Also discuss the practical…
A: Consumer equilibrium with the help of indifference curve The term "market equilibrium" refers to a…
Q: Table 1 Number of Chocolate Bars per Day Total Utility Marginal Utility 80 2 3. 4 150 200 230 10 2-…
A: Number of chocolates Total utility Marginal utility 1 80 2 150 3 200 4 230 5…
Q: 1. Based on the table below describe Marginal Utility and Diminishing Marginal Utility? What happens…
A: The utility is a term that is used to measure satisfaction or happiness in terms of economics. There…
Q: Unit of product (1) Marginal utility, A (2) Marginal utility, B (3) Marginal utility, C First…
A: In microeconomics, the function of U {"utility"} is described as a crucial term or concept in which…
Q: Q. 4. Observe the given table and answer the questions: Unit of a commodity TU units MU units 1 6 2…
A: When total utility is maximum, marginal utility is zero When total utility falls, marginal. Utility…
Q: Alesandro purchases two goods, X and Y, and the utility gained for the last 3 unit purchased of each…
A: When an individual is consuming two products in the market, the consumer equilibrium is the…
Q: 23
A: It clarifies why a buyer's interest bend slants descending. Assuming the cost of decent falls, the…
Q: 40. As long as the principle of diminishing marginal utility is operating, any increased consumption…
A: The change in the total utility from the consumption of an additional unit of a good is known as a…
Q: Explain the cardinal and ordinal utility approach ?
A: Utility: Utility is the wants satisfying power of goods or services; in other words, utility is the…
Q: Table 6.1 Number of Total Utility Marginal Utility Hamburgers per Day 30 2 52 67 4. 76 4. Number of…
A: Meaning of Utility Function: The term utility function refers to the total utility for a consumer…
Q: Q1: Complete the following table and answer the questions below: a) Graphically show Law of…
A: The following problem has been answered as follows:
Q: Units Consumed Total Utility Marginal Utility 10 10 3 25 4 30 3 6 34
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub- parts for…
Q: 2. May purchased a new mobile phone and paid ₱10,000. This means that her marginal utility from this…
A: In a market, marginal utility refers to the amount of satisfaction gained by a consumer when he…
Q: i. It is known that the indifference curve is convex. What does this tell you about the relationship…
A: Answer - Part"1" Answer -When Indifference curve shows that which give show the combination of two…
Q: Explain the four kinds of utility.
A: In economics, to represent benefit or worth, the idea of utility is utilized. Its use has grown…
Q: 7. Marginal utility is equal to average utility at that time when average utility is
A: To find : When is margin utility equal to average utility.
Q: What do we mean by well-behaved preferences? How do the indifference curves look like for such…
A: Since the question you posted consists of multiple parts, we will answer the first three parts for…
Q: please explain the theory of marginal utility. Please include a particular product or service you…
A: The literal meaning of utility is satisfaction. The concept of utility is measured under two…
Q: The primary goal of very consumer is to maximize satisfaction. Explain, how a consumer achieves…
A: In economics, it is assumed that consumers are rational and they try to maximize their utility.…
Q: 2. If peanut butter brings you 30 utils of pleasure for the last dollar's worth, and the last dollar…
A: In order to maximize utility, a consumer make economic decisions that guarantee the highest level of…
Q: Class Activity Q1: Complete the following table and answer the questions below: a) Graphically show…
A: Total utility is the total satisfaction derived from consuming a good. Marginal utility is the…
Q: 5. The price of good x increases from 4 to 6. A consumer with an income of 120 buys 15 units of good…
A: Answer: Substitution effect: it shows the difference between quantity after the increase in price…
Q: Define marginal utility and law of diminishing marginal utility with example.
A: Consumer theory: It studies the behavior of consumers based on their consumption preferences given…
Q: 19) when total utility, U(X) is maximized, marginal utility, MUx is a)constant b)rising c)maximized…
A: Total utility and marginal utility:When a consumer goes on to consume the units of good continuously…
Q: 1. Using the following information, calculate total utility and marginal utility. a. Plot the total…
A: Economics is the study of production, allocation and distribution of resources in an economy. It has…
Q: what does it mean if the utility function is ordinal and not cardinal.
A: Ordinal refers to order of a series. Cardinal refers to giving a value to the series.
Q: Question 4 Explain the concept of utility, what its purpose is with regard to consumers and define…
A: Utility is an indicator of individuals' well-being in general. It was thought to measure the…
Q: Question 3 a. Is it possible for total utility to increase while marginal utility diminishes?…
A: Answer to the question is as follows :
Q: 3. The table below demonstrates the total utility Terrence derives from eating different quantities…
A: When economic agents take part in the production process, they get an income in exchange for labour.…
Q: 2. Suppose that the total benefit that Firas gets from eating successive pieces of chocolate is as…
A: Since multiple questions are asked here, we will answer the first question for you. If you want any…
Q: 30. Refer to Figure #5. Assume that the consumer depicted in the figure faces prices and income such…
A: The IC indifference curve represents the combinations of two products that yield the same utility…
Q: 3. Explain the law of diminishing marginal utility with the help of examples and also explain the…
A: The law of diminishing marginal (MU) utility explains how the utility or satisfaction derived from…
Q: All the questions below are referring to Figure 6 (i) and explain and show your computation in your…
A: In economics, utility refers to the entire pleasure derived from the consumption of an item or…
Q: (Table) Referring to the table, which shows the total utility and marginal utility for ice cream…
A: Utility refers to the value of a commodity experienced by a consumer. It is the total satisfaction…
Q: Chocolate Bars Hot Chocolate Quantity Total Utility Quantity Total Utility 1 15 1 25 30 35 40 43 48…
A: Marginal utility is the additional utility earned after an additional unit.
Q: 1. What is the Total Utility of the second unit? 2. What is the Marginal utility of the third,…
A: To ascertain the missing total utility and marginal utility and complete the table,
Q: 5. The principle of diminishing marginal utility means that as you spend more and more hours…
A: Answer for Q#25 According to the law of diminishing marginal utility, when more and more units of a…
Q: 1. The table shows the total utility Joseph derives from eating pizza in the evening while study-…
A: Given: Pizza Total Utility 0 0 1 30 2 48 3 60 4 70 5 78 6 80 7 76 Note: Due to…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 3. Finding the optimal combination of two goods - $2. Suppose that Larry buys Larry enjoys consuming both cheese and fruit. Each pound of cheese costs Pc = $1, and each pound of fruit costs PF 300 pounds of cheese and 200 pounds of fruit per year. The following graphs show his marginal utility curves for cheese and fruit. At his current consumption level, Larry's marginal utility from consuming the last pound of cheese he bought is MUC S 30 utils per pound, and his marginal utility from consuming the last pound of fruit he bought is MUF = 30 utils per pound. 60 40 30 IL 20 10 400 500 600 50 40 A 30 B C D 20 10 0 0 100 Is Larry currently maximizing his utility? Combination 200 300 CHEESE (Pounds per year) 300, 30 (Pounds per Year) 200 400 300 No; he could buy less cheese and more fruit, not spend any more money, and be better off. O No; he likes fruit and cheese more than other goods, so he should buy more of both. O No; he could buy more cheese and less fruit, not spend any more money,…5. Janice consumes two goods, X and Y. Janice has a utility function given by the expression: U=4X05Y05 and current prices of X and Y are $25 and $50, respectively. Janice currently has an income of 750 unit per time period. a. Write an expression for Janice's budget constraint. b. Calculate the marginal rate of substitution of X for Y. (horizontal line X, vertical line Y). c. Calculate the values of X and Y that will maximize utility. d. Graph your answers (budget line, indifference curve)Suppose that Dale consumes only coffee and cheese, both of which have diminishing marginal utility. For each of the following cases, determine whether Dale should 1Consume more coffee and less cheese, or2Consume less coffee and more cheese: 1.The marginal rate of substitution of cheese for coffee is 3 (i.e., the marginal utility of cheese is three times the marginal utility of coffee), while the price ratio is 2 (i.e., cheese costs twice as much as coffee). 2.The marginal rate of substitution of cheese for coffee is 1 (i.e., the marginal utility of cheese is equal to the marginal utility of coffee) while the price ratio is 2 (i.e., cheese costs twice as much as coffee). 3.The marginal rate of substitution is initially equal to the price ratio, but the price of coffee increases. 4.The marginal rate of substitution is initially equal to the price ratio, but the price of cheese decreases. 5.The marginal rate of substitution is initially equal to the price ratio, but Dale enters exam…
- At Annie's current level of consumption, let MUp denote Annie's marginal utility from an additional pound of pasta, and let MUb denote Annie's marginal utility from an additional loaf of bread. Thus, MUp/MUb represents the number of loaves of bread Annie has to give up in order to buy another pound of pasta. the number of loaves of bread Annie is willing to give up to have another pound of pasta. the number of pounds of pasta Annie has to give up in order to buy another loaf of bread. the number of pounds of pasta Annie is willing to give up to have another loaf of bread.Suppose utility can be measured by "utils" and that Jim buys both coffee and bagels. The price of coffee is $2 and the price of a bagel is $3. If Jim is currently consuming coffee and bagels such that the marginal utility from the last cup of coffee consumed was 6 utils and the marginal utility from the last bagel consumed was 12 utils, is Jim maximizing utility? Why or why not? If not, what should Jim do? Explain in detail.Currently, Paula is maximizing utility by purchasing five TV dinners (T) and four LeanCuisine Meals (L) each week. Suppose both T and L cost $5 each.a. Graph Paula’s initial utility-maximizing choice.b. Suppose the price of T falls by $1 and the price of L rises by $1.25. Can Paula stillafford to buy her initial consumption choices? What do you know about her new budgetconstraint?c. Make a new graph to show why Paula will choose to consume more T and less Lgiven her new budget constraint to maximize utility. Is her utility increased, decreased,or unchanged given the price change? [Hint: try to make the graph as big as possible tosee how the utility is tangent/intersects with the lines more easily] d. In part (b), suppose another scenario where the price of T rises by $1 and the priceof L falls by $1.25. Is Paula’s utility increased, decreased, or unchanged given the pricechange?
- Answer the following short questions:a. Suppose that a consumer’s preferences between goods x andy are represented by the utility function u(x, y) = x^2 + 16xy + 64y^2. If these two goods have the same price, describe the optimal consumptionchoice of this consumer.b. Suppose that when the price of a good change, the incomeand substitution effects change the consumer’s demand for that goodin opposite directions.i. Is this good a normal or an inferior good? Explain.ii. Is this good a Giffen or an ordinary good? Explain.c. Is the following statement true or false? The differencebetween a monopolist’s marginal cost and its profit-maximizing price issmaller when the demand is more elastic.Maria has a fixed weekly budget which she has been spending on goods A, B, and C. Her utility function exhibits a diminishing marginal rate of substitution. She uses the equi-marginal principle to decide how much to purchase of each product. Suppose that for Maria's current consumption bundle it holds that MUA MUB MUC PA Рв PC You may assume that she has spent her entire budget. If Maria wishes to maximise utility, next week, she should A) buy product A only. B) buy products B and C only. C) buy less of A and more of B and C. D) buy more of A and less of B and C.Currently, Paula is maximizing utility by purchasing 5 TV dinners (T) and 4 Lean Cuisine meals (L) each week. Graph Paula’s initial utility-maximizing choice. Suppose that the price of T rises by $1 and the price of L falls by $1.25. Can Paula still afford to buy her initial consumption choices? What do you know about her new budget constraint? Use your graph to show why Paula will choose to consume more L and less T given her new budget constraint. How do you know that her utility will increase? Some economists define the ‘‘substitution effect’’ of a price change to be the kind of change shown in part c. That is, the effect represents the change in consumption when the budget constraint rotates about the initial consumption bundle. Precisely how does this notion of a substitution effect differ from the one defined in the text? If the substitution effect were defined as in parts, how would you define ‘‘the income effect’’ to get a complete analysis of how a person responds to a…
- Total utility O diminished as the quantity of a good increases increases as long as more goods are acquired increases as long as marginal utility increases O increases as long as marginal utility is positive diminishes as consumption of some good risesAnn consumes only cookies and muffins. At her current consumption bundle,her marginal utility from cookies is 3 and her marginal utility from muffins is 2. Eachcookie costs $2 and each muffin costs $1. Is she maximizing her utility? If not, how canshe increase her utility while keeping her expenditure constant?6. MRS and utility maximization Suppose your classmate Bob loves to eat dessert—so much so that he allocates his entire weekly budget to apple crisp and pie. The price of one bowl of apple crisp is $1.25, and the price of a piece of blueberry pie is $3.75. At his current level of consumption, Bob's marginal rate of substitution (MRS) of apple crisp for pie is 2. In other words, Bob is willing to sacrifice two bowls of apple crisp for one piece of pie per week. Does Bob's current consumption bundle maximize his utility? That is, does it make him as well off as possible? If not, how should he change it to maximize his utility? Bob could increase his utility by buying more apple crisp and less pie per week. Bob could increase his utility by buying less apple crisp and more pie per week. Bob's current bundle maximizes his utility, and he should keep it unchanged.