EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 16, Problem 12SP
To determine
Diminishing
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How do your total and marginal utility change as you stay at home watching the same TV show (not necessarily the same episode) alone all day?
Give a real-life example (from your daily life) that illustrates total utility rising as marginal utility declines.
Suppose it is “All You Can Eat” Night at your favorite restaurant. Once you’ve paid $69.95 for your meal, how do you determine how many helpings to consume? Should you continue eating until your food consumption has yielded $69.95 worth of satisfaction? What happens to the marginal utility from successive helpings as consumption increases?
Chapter 16 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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- What are the conditions for utility maximization?arrow_forwardDefine Utility in your own words.What does it mean to have diminishing marginal utility?How do you calculate Marginal Utility? What is the formula?What is the utility maximizing rule? Describe the rule as well as state it mathematically.arrow_forwardPositive marginal utility is when the marginal utility increases the total utility whereas negative marginal utility is when the consumption of an additional unit reduces the amount of the total utility. Is it true or false?arrow_forward
- uestion1:Donna and Jim are two consumers purchasing strawberries and chocolates. Jim’s utility function is U (x, y) = xy and Donna’s utility function is U (x, y) = x2y where x denotes strawberries and y denoteschocolates. Jim’s marginal utility functions are MUX=y and MUy=x while Donna’s are MUX=2xy and MUy=x2. Jim’s income is $100, and Donna’s income is $150. What is the optimal bundle for Donna if the price of strawberries is $2 and the price of chocolate is $4? What is the optimal bundle for Jim, and for Donna, when the price of strawberries rises to $3?Question2:Consider a one-period ecoarrow_forwardReese thinks peanut butter and chocolate are great when separate, but when they combine they are even more epic. In other words, Reese likes to eat either peanut butter or chocolate, but when he eats them together, he gets additional satisfaction from the combination. His preference over peanut butter (x) and chocolate (y) is represented by the utility function: u(x, y) = xy + x + y Suppose that now Reese loses almost his entire income, so that he is left with only one dollar, i.e. his new income is I0 = 1. If prices are still px = 2, py = 4, what is his new optimal consumption of x and y (Hint: Remember that consumption of both goods must be weakly positive, i.e. x∗ ≥ 0 and y∗ ≥ 0) (a) x∗ = 0.5, y∗ = 0(b) x∗ = 0.25, y∗ = 0(c) x∗ = 0.75, y∗ = 0.25(d) x∗ = 0.75, y∗ = 0(e) x∗ = 0.5, y∗ = 1arrow_forwardwould you rather maximize your total utility or your marginal utility?arrow_forward
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