The following table presents information on Angel's marginal utility and price paid for the consumption of Pomegranates andOranges, which are the only two goods that he consumes.AngelOYesONOONot enough informationWhat should Angel do?PomegranatesPrice$4Based on the utility maximizing rule,Is Angel maximizing their utility?OPurchase more Pomegranates and less OrangesOPurchase less Pomegranates and more OrangesOMake no changesMarginal UtilityMacBook Air7OrangesPrice$12Marginal Utility31

Utility maximisation level is the point where slope of Indifference curve is equal to the slope of…

Based on the utility maximizing rule, Is Angel maximizing their utility? OYes ONO ONot enough information What should Angel do? OPurchase more Pomegranates and less Oranges OPurchase less Pomegranates and more Oranges OMake no changes

Based on the utility maximizing rule, Is Angel maximizing their utility? OYes ONO ONot enough information What should Angel do? OPurchase more Pomegranates and less Oranges OPurchase less Pomegranates and more Oranges OMake no changes

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 4P

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Question

The following table presents information on Angel's marginal utility and price paid for the consumption of Pomegranates and
Oranges, which are the only two goods that he consumes.
Angel
OYes
ONO
ONot enough information
What should Angel do?
Pomegranates
Price
$4
Based on the utility maximizing rule,
Is Angel maximizing their utility?
OPurchase more Pomegranates and less Oranges
OPurchase less Pomegranates and more Oranges
OMake no changes
Marginal Utility
MacBook Air
7
Oranges
Price
$12
Marginal Utility
31

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Take Jeremys 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 Jeremys utility.
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 roundâ€”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 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.
Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
Who determines how much utility an individual will receive from consuming a good?