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Chapter 6: Problem 15

The total utilities associated with the first 5 units of consumption of good \(X\) are \(15,30,40,47,\) and \(50,\) respectively. What is the marginal utility associated with the third unit? a. 15 b. 70 c. 85 d. 10 e. 45

Short Answer

Expert verified
The marginal utility associated with the third unit is 10.

Step by step solution

01

Understand the concept of marginal utility

Marginal utility is the additional satisfaction (utility) gained from consuming an additional unit of a good. To calculate the marginal utility, we need to find the increase in total utility from consuming each additional unit.
02

List the total utilities

We are given the total utilities (TU) for the first 5 units: Unit 1: TU = 15 Unit 2: TU = 30 Unit 3: TU = 40 Unit 4: TU = 47 Unit 5: TU = 50
03

Calculate the marginal utilities

To find the marginal utility (MU) for each unit, we will subtract the total utility of the previous unit from the total utility of the current unit. Unit 1: MU = (TU_1 - 0) = 15 Unit 2: MU = (TU_2 - TU_1) = (30 - 15) = 15 Unit 3: MU = (TU_3 - TU_2) = (40 - 30) = 10 Unit 4: MU = (TU_4 - TU_3) = (47 - 40) = 7 Unit 5: MU = (TU_5 - TU_4) = (50 - 47) = 3
04

Identify the marginal utility for the third unit

From our calculations in Step 3, the marginal utility of the third unit is 10. So, the correct answer is option d. 10.

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Most popular questions from this chapter

A certain consumer buys only food and compact discs. If the quantity of food bought increases, while that of compact discs remains the same, the marginal utility of food will a. fall relative to the marginal utility of compact discs. b. rise relative to the marginal utility of compact discs. c. rise, but not as fast as the marginal utility of compact discs rises. d. fall, but not as fast as the marginal utility of compact discs falls.

Suppose an individual consumes pizza and cola. To reach consumer equilibrium, the individual must consume pizza and cola so that the a. price paid for the two goods is the same. b. marginal utility of the two goods is equal. c. ratio of marginal utility to price is the same for both goods. d. ratio of the marginal utility of cola to the marginal utility of pizza is 1

Rational consumers will continue to consume two goods until the a. marginal utility per dollar's worth of the two goods is the same for the last dollar spent on each good. b. marginal utility is the same for each good for the last dollar spent on each good. c. prices of the two goods are equal for the last dollar spent on each good. d. prices of the two goods are unequal.

The amount of added utility that a consumer gains from the consumption of one more unit of a good is called a. incremental utility. b. total utility. c. diminishing utility. d. marginal utility.

Assume that a person's consumption of just the right amounts of pork and chicken is in equilibrium. We can conclude that the a. marginal utility of pork must equal the marginal utility of chicken. b. price of pork must equal the price of chicken. V c. ratio of marginal cost to price must be the same in both the pork and the chicken markets. d. ratio of marginal utility to price must be the same for pork and chicken.
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