The relationship between the diminishing
Concept Introduction:
Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.
Explanation of Solution
The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.
Some restrictions that restaurant can impose on customers to make a profit are as follows:
(a) The customer cannot share his plates with other customers.
(b) Time of consumption must be limited.
(c) No takeaways are allowed in the bags.
Want to see more full solutions like this?
Chapter 6 Solutions
Econ Micro (book Only)
- Question 14 Marginal utility can be: decreasing, but not negative. positive, but not negative positive, negative, or zero. positive or negative, but not zero.arrow_forward1. Calculate the marginal utility per dollar for sodas.arrow_forward1. Generally speaking, as more of a good is purchased by an individual consumer, marginal utility A. increases and total utility increases. B. increases and total utility decreases. C. decreases and total utility increases. D. decreases and total utility decreases.arrow_forward
- impacts of marginal utility. Imagine that you are a seller of phones: How can you increase the consumer demand curve by helping increase the marginal utility for consumers? Detail specific steps to take and provide examples.arrow_forward___1. It is the satisfaction derived from the consumption of a commodity. A. Total utility C. Disutility B. Marginal utility D. Utility ___2. It is the change of total utility over the change of quantity. A. Total utility C. Disutility B. Marginal utility D. Utility ___3. It is the foregone value when a firm is engaged in production. A. Cost C. Revenue B. Profit D. Interestarrow_forwardQuestion 13 If the marginal utility of a commodity is zero, then: Total utility of this commodity has reached a maximum. The paradox of value must have been reached. The commodity in question has no utility, i.e. it’s not one that consumers want to use. Total utility for this commodity must be zero also.arrow_forward
- Number Consumed Total Utility Marginal Utility 0 0 1 9 2 19 3 27 4 35 5 42 6 42 7 40 Find Marginal utility for each one.arrow_forwardRelationship Between the Consumer Demand Curve and Marginal Utility Discuss the impacts of marginal utility. Imagine that you are a seller of sunglasses: How can you increase the consumer demand curve by helping increase the marginal utility for consumers? Detail specific steps to take and provide examples.arrow_forward6. Using Marginal Utility analysis, carefully explain why the Demand Curve for a given product is sloping downward.arrow_forward
- Q2) This table shows the quantities consumed of one commodity and the total utility gained from this commodity. Marginal Utility Total Utility Quantity 9 1 18 2 25 3 30 4 34 5 36 6 36 7 34 8 The Required: 1. Extract the marginal utility 2. Draw the total and marginal utility curve in the graph and explain the importance of marginal utility.arrow_forward____ 31. Total utility can be thought of as the a. total satisfaction derived from a bundle of goods. b. minimum amount of money a consumer is willing to spend on a bundle of goods. c. additional satisfaction a consumer receives from the marginal unit of a good. d. willingness to pay for the marginal unit of a good.arrow_forward26. If you have Marginal utility of 2 with a Total utility equals to 56, then when marginal utility is reduce to zero while Total utility remains the same, what does it mean? a. satisfaction diminishes b. TU is maximum c. Quantity diminishes d. Marginal utility is maximumarrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc