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Chapter 19: Problem 1

If we know Olivia King's demand schedule, we can find (LO1,3) a) her marginal utility, but not her total utility b) her total utility, but not her marginal utility c) both her total utility and her marginal utility d) neither her total utility nor her marginal utility

Short Answer

Expert verified
From Olivia King's demand schedule, we can find her marginal utility by looking at the changes in consumption of the good or service with the change in price and calculating the additional satisfaction gained from consuming one more unit. We can also find her total utility by adding up her marginal utilities for each unit of the good or service consumed. Therefore, the answer is c) both her total utility and her marginal utility.

Step by step solution

01

Understanding Demand Schedule, Total Utility, and Marginal Utility

Demand schedule represents the relationship between the price of a product or service and the quantity demanded by a consumer. Total utility refers to the overall satisfaction gained from consuming a given quantity of a good or service. Marginal utility, on the other hand, is the additional satisfaction gained from consuming one more unit of a good or service.
02

Relationship Between Demand Schedule and Utility

Demand schedule shows how quantity demanded changes according to price changes in the market. On the other hand, total utility and marginal utility represent the satisfaction gained by a consumer with the change in consumption of a good or service. To find total utility and marginal utility from the demand schedule, we need to know how the satisfaction gained from consuming different quantities of a good or service changes with the change in price. For example, if we observe that Olivia King's demand for a product increases when the price of the product decreases, it can be concluded that her satisfaction increases as she consumes more of that product.
03

Finding Total Utility and Marginal Utility

Given the demand schedule, we can observe how the quantities demanded changes with price. By calculating the differences in utility when the quantity demanded increases or decreases, we can determine Olivia King's marginal utility. If we can find how Olivia's satisfaction changes as she consumes different quantities of the good or service, we can add up her marginal utilities to obtain the total utility.
04

Conclusion

From Olivia King's demand schedule, we can find: a) her marginal utility, as we can look at the changes in consumption of the good or service with the change in price, and calculate the additional satisfaction gained from those changes. b) her total utility, by adding up her marginal utilities for each unit of good or service consumed. Therefore, the answer is c) both her total utility and her marginal utility.

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Most popular questions from this chapter

Which statement would be true about a person who goes to an all-you-can-eat restaurant? (LO2) a) She will never eat more food than she would at a regular restaurant. b) She will eat until closing time. c) She will eat until the marginal utility of the last portion of food is zero. d) She will keep eating while her marginal utility is rising.

WWhich statement is the most accurate? (LO3) a) Your utility schedule for chewing gum can never change, since it is based on your demand schedule for chewing gum. b) Interpersonal utility comparisons cannot be made unless people buy that good at the same price. c) Everyone gets the same utility from taking a biology course. d) A good or service does not have any inherent utility, so we cannot say that a day at a beauty spa is worth \(\$ 250\).

If this year's Nobel Prize winner in physics gives a free lecture at your school and just eight people attend, you may conclude that (LO1) a) no one derived any utility from his lecture b) none of the people who attended would have come if there had been an admission fee c) the lecture must have been at an inconvenient time. d) at least some of the people who attended enjoyed a consumer surplus.

A product's utility to a buyer is measured by (LO1) a) its usefulness b) its price c) how much the buyer is willing to pay for it d) none of the above

Price gouging can take place only when (LO6) a) there is a natural disaster b) buyers are poorly informed about market conditions c) some buyers are willing to pay the asking price, however high d) the forces of supply and demand are not operating
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