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Chapter 20: Q. 2- For Critical Thinking (page 450)

What is true of the marginal utility per dollar spent on a stomach pacemaker compared with the marginal utility per dollar of food consumed during that interval?

Short Answer

Expert verified

The standard rule is that marginal utility equals the change in total utility divided by the change in quantity of goods.

Step by step solution

01

Introduction.

The added satisfaction that comes from having one more unit of a good or service is known as marginal utility. Economists use the concept of marginal utility to determine how much of a product consumers are willing to buy.

02

Marginal utility per dollar.

To calculate the change in total utility, subtract the current total utility from the previous total utility. The change in units is calculated by subtracting the current unit amount from the previous unit amount.

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Most popular questions from this chapter

Return to Problem 20-4. Suppose that the price of cheeseburgers falls to $1. Determine the new utility maximizing combination of cheeseburgers and french fries.

Consider Figure 20-1. If this individual were to contemplate consuming a seventh digital app and experience a total utility of 15 utils as a consequence, what would be the resulting marginal utility? Would the points on the total utility and marginal utility graphs in panels (a) and (b) lie higher or lower to the right of the current endpoints of those graphs?

As an individual consumes more units of an item, the person eventually experiences diminishing marginal utility. This means that to increase marginal utility, the person must consume less of an item. Explain the logic of this behavior using the example in Problem 20-1.

You determine that your daily consumption of soft drinks is 3and your daily consumption of tacos is 4when the prices per unit are 50cents and $1, respectively. Explain what happens to your consumption bundle, and, after your consumption choices adjust, to the marginal utility of soft drinks and the marginal utility of tacos, when the price of soft drinks rises to 75cents.

Sue's monthly budget for bottled water and soft drinks is \(23. The price of bottled water is \)1per bottle, and the price of soft drinks is$2per bottle. Calculate the slope of Sue's budget constraint. Given this information and the information provided in Problem F-3, find the combination of goods that satisfies Sue's utility-maximization problem in light of her budget constraint.
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