Chapter 7: Problem 13

If we know Olivia King's demand schedule, we can find \((\mathrm{LO1}, 3)\) 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

Knowing Olivia King's demand schedule allows us to find her marginal utility, but not her total utility. Therefore, the correct answer choice is: a) her marginal utility, but not her total utility.

Step by step solution

Understanding demand schedule

A demand schedule shows the quantity of a good that an individual is willing to purchase at each possible price. It is essentially a representation of the individual's preferences for different quantities of a good at different prices. #Step 2: Understanding total utility and marginal utility#

Understanding total utility and marginal utility

Total utility is the overall satisfaction derived from consuming a certain amount of a good, and marginal utility is the additional satisfaction derived from consuming one more unit of the good. Total utility increases as more units of a good are consumed but at a decreasing rate, while marginal utility typically decreases for each additional unit consumed. #Step 3: Identify how demand schedule relates to total utility and marginal utility#

Identify how demand schedule relates to total utility and marginal utility

The demand schedule reflects the individual's willingness to buy certain quantities at specific prices, and it can provide information about the marginal utility of the additional units of goods consumed. By analyzing how much more the individual consumes at different prices, we can infer information about the changes in marginal utility. #Step 4: Determine which utility aspects can be inferred from the demand schedule#

Determine which utility aspects can be inferred from the demand schedule

By knowing Olivia King's demand schedule, we can infer the marginal utility (how much her satisfaction changes with additional consumption at different prices). However, merely knowing the demand schedule doesn't allow us to calculate her total utility since it only provides information about the relationship between quantity and price, and not the cumulative satisfaction. #Step 5: Select the appropriate answer choice#

Select the appropriate answer choice

Based on our analysis, it is clear that knowing Olivia King's demand schedule allows us to find her marginal utility but not her total utility. Therefore, the correct answer choice is: a) her marginal utility, but not her total utility.