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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

Question:At any point on an indifference curve, the slope of curve measures the consumer’s

a. income

b. willingness to trade one good for the other

c. perception of two goods as substitutes or complements.

d. elasticity of demand

Maya divides her income between coffee and croissants (both of which are normal goods). An early frost in Brazil causes a large increase in the price of coffee in the United States.

a. Show the effect of the frost on Maya’s budget constraint.

b. Show the effect of the frost on Maya’s optimal consumption bundle, assuming that the substitution effect outweighs the income effect for croissants.

c. Show the effect of the frost on Maya’s optimal consumption bundle, assuming that the income effect outweighs the substitution effect for croissants.

Homer buys pizza for \(10 and Pepsi for \)2. He has income of \(100. His budget constraint will shift inward if.

a. the price of pizza rises to \)12.

b. the price of Pepsi falls to \(1

c. his income rises to \)150

d. the price of pizza, the price of Pepsi and his income all rise by 50 percent.

Draw a consumer’s indifference curves for wine and cheese. Describe and explain four properties of these indifference curves.

Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?
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