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Chapter 6: Q.7 (page 152)

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

Short Answer

Expert verified

Yes, marginal utility falls with each additional unit of consumption.

Step by step solution

01

Step 1:Definition

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

Explanation

According to the law of declining marginal utility, the price a customer is ready to pay for a good is determined by its marginal utility, which decreases with each additional unit of consumption.

The concept of diminishing pricing is intimately related to the law of diminishing marginal utility. Consumers are willing to pay lesser dollar amounts for more of a thing when its utility diminishes as its usage increases.

03

Step 3:Conclusion

Since this is due to the fact that each unit of consumed goods creates less additional utility.

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Most popular questions from this chapter

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?

1. 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.

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.

Can an increase in the price of cheese possibly induce a consumer to buy more cheese? Explain.

Mr. Burns buys only lobster and chicken. Lobster is a normal good, while chicken is an inferior good. When the price of lobster rises, Mr. Burns buys

  1. less of both goods.

  2. more of lobster and less chicken.

  3. less lobster and more chicken.

  4. less lobster, but the impact on chicken in ambiguous.
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