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Chapter 6: Q. 6 (page 151)

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

Short Answer

Expert verified

Yes, total utility rises till the point where the marginal utility is positive.

Step by step solution

01

Step 1:Definition

Total Utility and Marginal Utility:

In economics, total utility and marginal utility are concepts under utility that assist determine a consumer's level of satisfaction. The total utility refers to the whole amount of pleasure derived by a customer from the consumption of a specific amount of products. Marginal utility, on the other hand, refers to the additional utility gained by a consumer from the consumption of one additional unit of the good.

02

Step 2:Explanation

In general, better total utility is associated with more consumption of a good. The additional utility gained from each unit of higher consumption, on the other hand, tends to reduce in a diminishing marginal utility pattern. The amount of utility derived from eating goods is determined by the individual's preferences.

03

Step 3:Conclusion

Therefore, the amount at which marginal utility drops determines whether overall utility rises or falls with further consumption of a good.

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Most popular questions from this chapter

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.

The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called “closing the Washington Monument.” When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing marginal utility why the Washington Monument strategy is so misleading. Hint: If you are really trying to make the best of a budget cut, should you cut the items in your budget with the highest marginal utility or the lowest marginal utility? Does the Washington Monument strategy cut the items with the highest marginal utility or the lowest marginal utility?

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.

A person who consumes wine and cheese gets a raise, so his income increases from \(3,000 to \)4,000. Show what happens if both wine and cheese are normal goods. Now show what happens if cheese is an inferior good.

At two points on an indifference curve,

a. the consumer has the same income.

b. the consumer has the same marginal rate of substitution.

c. the bundle of the goods cost the consumer the same amount.

d. the bundle of goods that yield the consumer same satisfaction.
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