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Chapter 6: Q.8RQ (page 152)

Is it possible for total utility to increase while marginal utility diminishes? Explain.

Short Answer

Expert verified

Yes, total utility can increase as marginal utility falls.

Step by step solution

01

Step 1. Introduction:

Total utility is the satisfaction derived by an individual from the consumption of a good. Marginal utility is the additional utility derived by an individual through the consumption of an additional unit of a good.

02

Step 2. Explanation:

An individual will prefer to choose commodities that provides that highest level of utility. The more the commodities an individual consumes, the higher will be the total utility. However, with an additional consumption of any commodity, the marginal utility of an individual will rise but at a decreasing rate. Thus, each additional unit brings a smaller gain than the next one, but the total utility still rises.

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Most popular questions from this chapter

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

As a college student you work at a part-time job, but your parents also send you a monthly “allowance.” Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?

If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?

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

Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of \(2 in gasoline money. He has a total of \)10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.

Round TripsTotal UtilityPhone MinutesTotal Utility
0000
18020200
215040380
321060540
426080680
5300100800
6330120900
7200140980
81801601040
91601801080
101402001100
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