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Chapter 20: Q.19 (page 453)

Take a look at Figure 20-1. Suppose that the individual currently consumes 5 digital apps. What happens to the person's total utility if he were to reduce his consumption to 4 units? Why does this fact imply that the marginal utility curve cuts through the horizontal axis of the panel (c) between the fourth and fifth app consumed?

Short Answer

Expert verified

The marginal utility curve cuts through the horizontal axis of the panel (c) between the fourth and fifth app consumed as it becomes zero

Step by step solution

01

Given Information

Marginal utility is the additional fulfilment a shopper gets from having another unit of a decent or administration. The idea of marginal utility is utilized by financial analysts to decide the amount of a thing buyers will buy. The law of decreasing marginal utility is frequently used to legitimize moderate charges.

02

Explanation

We know, that the total utility is 20unitsfrom 5unitsto 4units

Hence∆T=20-20=0

Marginal Utility=Change in No. of Units Consumed(ΔTU)Change in Total Utility(ΔQ)

=20-201=0

The marginal utility curve cuts through the horizontal axis of the panel (c) between the fourth and fifth app consumed as it becomes zero

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Most popular questions from this chapter

Refer to the following table for a different consumer, and assume that each week this consumer buys only weckly subscriptions to ceonomic statistics apps and subscriptions to office productivity apps. The price of a subscription to each type of economic statistics app is \(2per week, and the price of a subscription to each office productivity app is \)60per week. If the consumer's available income is $128per week, what quantity of each item will the individual purchase each week at a consumer optimum?

Consider the indifference curve illustrated in Figure F-1. Explain, in economic terms, why the curve is convex to the origin.

At a consumer optimum involving goods Aand B, the marginal utility of good Ais 2utils, and the marginal utility of good Bis 8utils. How much greater or smaller is the price of good B compared with the price of good A?

The table below represents Sue's preferences for bottled water and soft drinks, the combination of which yields the same level of utility.

Calculate Sue's marginal rate of substitution of soft drinks for bottled water at each rate of consumption of water (or soft drinks). Relate the marginal rate of substitution to marginal utility.

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.
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