Consider the movements that take place from one point to the next ( Ato Bto Cand so on) along the total utility curve as the individual successively increases consumption by one more unit, and answer the questions that follow.

a. Which one-unit increase in consumption from one point to the next along the total utility curve gencrates the highest marginal utility?

b. Which one-unit increase in consumption from one point to the next along the total utility curve gencrates zero marginal utility?

c. Which one-unit increase in consumption from one point to the next along the total utility curve generates negative marginal utility?

Short Answer

Expert verified

a. The first week's marginal utility is 5units.

b. the marginal utility of points Eto Fis zero.

c. The graph above reveals that the points Fto G

Step by step solution

01

    Introduction

A graphical representation of total utility and usage per week is shown below. The various points on the total utility curve represent various levels of utility.

The consumption and total utility of per week are represented graphically above, with consumption on the x-axis and total utility on the y-axis. A total utility curve is defined as the line connecting the points AandG.

02

Step:     Option a Given diagram

(a) The highest marginal utility, i.e. 5units, is generated by points Ato Bin the diagram. The first week's marginal utility is 5units.

03

    Option b

(b) The following figure shows that the marginal utility of points Eto Fis zero. The total utility is highest and constant at these positions, i.e. 11units.

04

    Option c 

(c) The graph above reveals that the points Fto Ghave negative marginal utility Le. -1. Total utility begins to decrease at this time, going from 11to 12units.

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