The marginal rate of substitution is the maximum number of units of good Y that the consumer would willingly sacrifice for an extra unit of good X while keeping the satisfaction level unchanged. change in total utility when one more unit of a good is consumed. slope of the utility function. All of the above are correct.

Q: A negative marginal utility implies that the consumer has reached a point of satiation.

A: Total utility, in economics, is defined as the total amount of satisfaction which a consumer…

Q: The law of diminishing marginal utility      A) refers to the fall in additional satisfaction…

A: Marginal Utility refers to the additional satisfaction derived by the consumption of one more unit…

Q: An individual preference scale for two goods x and y is defined by the marginal rate of substitution…

A: Utility functions define the level of satisfaction or welfare of consumer with the given level of…

Q: Clara's utility function is U(x, y) =(x+2)(y+1). If her marginal rate of substitution is -4 and she…

A: Marginal rate of substitution is the rate at which one good is substituted for other. It is the…

Q: Indifference curves are convex with respect to the origin. Thus they are steeper on the [Select ] v…

A: The indifference curve is the curve that exhibits equal utility to the consumer by the combination…

Q: A company offers the following buying options for good x to its customers: For the first 30 units,…

A: Given information Two goods X and Y For first 30 units of X pay full price After that for next 20…

Q: Walt has utility function u = x + y. He has an income of $240. If the price of good x changes from…

A: The given utility function is of perfect substitutes and in this type of utility function consumer…

Q: Suppose Pizza (P) and Hamburgers (H) are perfect substitutes to Kate. Two slices of Pizza always…

A: Given  Pizza (P) and Hamburgers (H) are perfect substitute  and utility from 2 slices of Pizza =…

Q: Which of the following utility functions represent preferences which do not satisfy monotonicity? U=…

A: Monotonic preferences refer to such consumer preferences towards the greater consumption of goods…

Q: For an individual the Marginal Rate of Substitution for good X and Y is constant and equal to 1 for…

A: The budget constraint of the individual shows the different combinations of two goods an individual…

Q: As a result of a decrease in the price of pizza rolls, consumers purchase more pizza rolls and buy…

A: The income impact expresses that when the cost of a decent reductions, maybe the purchaser of the…

Q: Which of the following statements is correct? Indifference curves cannot intersect due to the…

A: Indifference curve is a locus of different combinations of two goods that are consumed by consumers…

Q: According to the law of diminishing marginal utility total utility will rise at a falling rate as…

A: Utility is described as the overall satisfaction a consumer feels after using a product or service.…

Q: Marginal utility is defined as the increment to total utility that results from the consumption of…

A: Meaning of Utility Function: The term utility function refers to the total utility for a consumer…

Q: Consider the following utility function: U = 4X + Y. A consumer faces prices of P, = $2 and Py =1.…

A: Answer: A consumer maximizes his/her utility where the following condition satisfies:…

Q: Total utility is maximized when marginal utility becomes (positive, zero, negative)

A: The utility is a want satisfying power of a commodity. Marginal utility is the additional utility…

Q: True or false.  Assuming utility positively depends on two goods, indifference curves can be upward…

A: An indifference curve is a graph that depicts the combination of two commodities that provide equal…

Q: The marginal utility for the third unit of X is 60 utils, and the marginal utility for the fourth…

A: The law of diminishing marginal utility states that  as consumer consumes more and more of a good,…

Q: he rate of market substitution is:             The consumer’s marginal utility             The…

A: The rate which depicts the amount of one good being substituted for another good and is being used…

Q: If a rational consumer is in equilibrium, then: a. the marginal utility obtained from one product is…

A: A rational consumer is in equilibrium when he maximizes his utility subject to his budget.

Q: Suppose a consumer has preferences between two goods that are perfect substitutes. Can you change…

A: In economics, the price of a good and the quantity consumed are inversely related. When the price…

Q: Q1. Bob has a utility function defined over goods 1 and 2: u(x1; x2) = min{6*x1 + x2, x1 + 2*x2}…

A: u(x1; x2) = min{6*x1 + x2, x1 + 2*x2}

Q: he marginal rate of technical substitution Group of answer choices is the rate at which one input…

A: The marginal rate of technical substitution (MRTS):   MRTS is the rate at which the firm can trade…

Q: If the marginal utility from consuming the sixth unit of a product is 8 and the total utility from…

A: The total utility is the total satisfaction received by consuming the goods and services. The…

Q: A positive monotonic transformation of a utility function preserves   a. diminishing marginal…

A: A monotonic transformation of a utility function is a transformation in which. the ranking of the…

Q: A consumer is in equilibrium and is spending income in such a way that the marginal utility of…

A: The consumer is consuming two goods, X and Y in equilibrium. MU from X=20units MU from Y=35units…

Q: An individual utility function is given by U(x,y) = x·y. This individual demand (optimal purchase)…

A: Given  Individual utility function: U(x,y) = xy  ......... (1)  Let px and py be the price of good x…

Q: Suppose marginal utility of good X is 20 while its price is Rs. 4 per unit and marginal utility of Y…

A: (Q) Suppose the marginal utility of good X is 20 while its price is Rs. 4 per unit and the marginal…

Q: The price of goods A and B are 20 and 10 respectively. given that the marginal utility of commodity…

A: Marginal utility is the extra utility experienced with the consumption of an additional unit of a…

Q: The concept of diminishing marginal utility with the help of necessary tables and graphs taking a…

A: In economics, utility refers to the entire pleasure derived from the consumption of an item or…

Q: Question 8 An optimizing consumer will select the consumption bundle in which the marginal rate of…

A: Marginal Rate of substitution is the volume of good that a consumer is willing to consume in…

Q: The marginal utility of the last unit of apples consumed is 12 and the marginal utility of the last…

A: Marginal utility is the utility derived from the consumption of an additional unit of the good. When…

Q: Assuming utility positively depends on two goods, indifference curves can cross or intersect. True…

A: Indifference curve is a graphical representation which shows different level of combinations of two…

Q: T/F Explain If preference is strongly convex, the utility function will exhibit dimin- ishing…

A: The satisfaction or benefit acquired from consuming a product is referred to as utility;…

Q: The marginal utility for the sixth unit is:

A: Marginal utility:  The change in the utility from the increase in consumption of goods is marginal…

Q: Question 342. Under Marginal utility analysis, utility is assumed to be a A. Cardinal concept B.…

A: Marginal Utility can be referred to as the additional Utility obtained from the consumption of an…

Q: Draw an optimal consumption bundle which represents that consumers are willing to pay a greater…

A: The optimal consumption bundle is a collection of items that fit within a budget and provides the…

Q: The marginal utility of a good or service declines as one more unit is consumed because: (a)…

A: The law of diminishing marginal / minimal utility indicates that as an individual gets even more a…

Q: The slope of the budget constraint is all of the following except …........

A: A budget constraint is faced by an individual and represents the different possible combinations of…

Q: marginal rate of substitution (MRS) can be defined as: Select one or more: a. The amount of one…

A: Marginal rate of substitution depicts the relative price of two goods.

Q: The price of good "a" is $5 and the price of good "b" is $15. If the marginal utility of good "a" is…

A: Given information:  Price of a=$5  Price of b=$15    MU of a=20    MU of b=?

Q: A household with strictly convex preferences may consume only one of two goods.

A: Strict convexity of preferences may be a stronger property than simply plain convexity. Preferences…

Q: r derives from successive units of a product.             consumer's willingness to substitute one…

A: Marginal rate of substitution: The Marginal Rate of substitution can be defined as the rate at which…

Q: Which of the following statements is true? Group of answer choices If the more is better assumption…

A: All of the given statements are true.

Q: Indifference curves are convex to the origin because of: A) the assumption that more is preferred to…

A: Indifference curve shows combinations of two goods that give same level of utility to consumers.

Q: Find the maximizing utility for the person consuming two commodities from the following information:…

A: Answer - Total Utility -  It is the total satisfaction received by consuming by a given total…

Equilibrium Price and Quantity

Equilibrium refers to a state of balance that comes about because there is equality in all forces.