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- Is it possible for total utility to increase while marginal utility diminishes? Explain.Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round—trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
- Who determines how much utility an individual will receive from consuming a good?Praxilla, who lived in ancient Greece, 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 next 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 cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas 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 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utility—maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?
- Explain why individuals make Choices that are directly on the budget constraint, rather than inside the budget constraint DI outside it.The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called closing the Washington Monument. When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing marginal utility why the Washington Monument strategy is So misleading. Hint: If you are really trying to make the best of a budget cut, should you cut the items in your budget with tile highest marginal utility or line lowest marginal utility? Does the Washington Monument strategy cut the items with the highest marginal utility or line lowest marginal utility?39. The following chart shows thec total utility-that Ammar receives from çonşuming various amounts-of chocolate.candy bars each day: Number candy, bars consumed për đay Total'utility 1' 40- 2 70 90 100 4. 80 Which of the following statements about Ammar's marginal utility is correct? Hiş marginal utility from the first candy bar is greater-than his marginalutility from the second candy' bar
- DmISIIng Margifal Otmty n. TOTAL AND MARGINAL UTILITY Reset E UTILITY CALCULATIONS Total Utility Quantity Consumed Total Marginal Utility 70 Utility 60 50 22 40 1 22 30 18 20 40 10 14 2 3 4 54 Quantity Consumed 10 Marginal Utility 4 64 20 6. 10 70 3. 6. -10 6. 72 -20 -2 7 70 Quantity Consumed Quantity Consumed -6 8. 64 8 Prev 1 of 3 Score answer > ...Five consumers have the following marginal utility ofapples and pears:Marginal Utilityof ApplesMarginal Utilityof PearsClaire 6 12Phil 6 6Haley 6 3Alex 3 6Luke 3 12The price of an apple is $1, and the price of a pear is$2. Which, if any, of these consumers are optimizingtheir choices of fruit? For those who are not, howshould they change their spending?Total utility is maximized in the consumption oftwo goods by equating thea. prices of both goods for the last dollar spenton each good.b. marginal utilities of both goods for the lastdollar spent on each good.c. ratios of marginal utility to the price of bothgoods for the last dollar spent on each good.d. marginal utility of one good to the price ofthe other good.
