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Chapter 6: Q.6RQ (page 151)

Would you expect total utility to rise or fall with additional consumption of a good? Why?

Short Answer

Expert verified

The total utility will rise with additional consumption of a good.

Step by step solution

01

Step 1. Introduction:

Total utility is the satisfaction received by an individual through the consumption of goods of choice. An individual can consume a bundle of goods pertaining to the budget constraint.

02

Step 2. Explanation:

If provided with unlimited income, an individual can consume any number of commodities desired, however, this is not possible in the real world. The most common pattern of total utility is that consuming extra goods gives greater total utility. But, the increase in utility due to an additional unit of good consumption rises at a decreasing rate.

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Most popular questions from this chapter

Income effects depend on the income elasticity of demand for each good that you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?

Explain all the reasons why a decrease in a product's price would lead to an increase in purchases.

If a 10% decrease in the price of one product that you buy causes an 8% increase in quantity demanded of that product, will another 10% decrease in the price cause another 8% increase (no more and no less) in quantity demanded?

What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice? Explain why, if this rule does not hold, the choice cannot be utility-maximizing.

Take Jeremy’s total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremy’s utility.
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