Suppose consumption bundle A contains 2 books and 5 candy bars, consumption bundle B contains 4 books and 4 candy bars, and consumption bundle C contains 3 books and 2 candy bars. If consumption bundle A provides the same amount of utility as consumption bundle C, which of the following must be true? O a. The marginal utility of books is greater than the marginal utility of candy bars O b. Consumption bundle B provides the least utility Oc The marginal utility of candy bars is greater than the marginal utility of books Od. Consumption bundle B provides the most utility

Suppose consumption bundle A contains 2 books and 5 candy bars, consumption bundle B contains 4 books and 4 candy bars, and consumption bundle C contains 3 books and 2 candy bars. If consumption bundle A provides the same amount of utility as consumption bundle C, which of the following must be true? O a. The marginal utility of books is greater than the marginal utility of candy bars O b. Consumption bundle B provides the least utility Oc The marginal utility of candy bars is greater than the marginal utility of books Od. Consumption bundle B provides the most utility

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

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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.
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