Calculation of total utility and marginal utility .

Question

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Answer 1

Question

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

(b):

To determine

Acceptability of the statement.

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

(c):

To determine

Whether the given statement is acceptable.

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.

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Students have asked these similar questions

True or false with reasoning: 1) _______When we claim that utility can be ordinally measured, we assume that the consumer is able to measure the total and marginal utility received when one extra unit of a commodity is consumed. 2)_______If MRS between two goods is constant, then having more of one good without having more of the other does not increase utility. 3)_______Marginal Utility increases until total utility is at a maximum and then marginal utility decreases.

22. Peanut butter (PB) sells for 10 dollars per pound and Oysters (O) sell for 50 dollars perpound. Suppose Pat buys 5 pounds of peanut butter and one pound of oysters each month.With this consumption bundle, his MRSP B,O = 3. Which of the following is true (assumingPat’s preferences satisfy all the basic assumptions of consumer theory)?(a) Pat could increase his utility by buying more oysters and less peanut butter.(b) Pat could increase his utility by buying more peanut butter and less oysters.(c) Pat could increase his utility by buying more peanut butter and more oysters.(d) Pat could increase his utility by buying less peanut butter and less oysters.

Refer to Table 11W.1 and suppose the price of new product C is $2 instead of $4. How does this affect the optimal combination of products A, B, and C for the person represented by the data? Explain: “The success of a new product depends not only on its marginal utility but also on its price.”

Answer 2

Question

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

(b):

To determine

Acceptability of the statement.

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

(c):

To determine

Whether the given statement is acceptable.

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.

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Answer 3

Question

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

(b):

To determine

Acceptability of the statement.

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

(c):

To determine

Whether the given statement is acceptable.

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.

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Answer 4

Question

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

(b):

To determine

Acceptability of the statement.

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

(c):

To determine

Whether the given statement is acceptable.

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

(b):

To determine

Acceptability of the statement.

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

(c):

To determine

Whether the given statement is acceptable.

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.

Answer 6

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

Answer 7

Chapter 7, Problem 1DQ

(a):

To determine

Calculation of total utility and marginal utility.

Answer 8

(a):

Expert Solution

Explanation of Solution

The total utility can be calculated by adding up the marginal utilities and the marginal utility can be calculated by subtracting the total utility at the previous unit consumed from the total utility at the present consumption.

The total utility and the marginal utility at 1 unit consumption are 10 and the marginal utility from the 2^nd unit is 8. Thus, the total utility at the 2^nd unit can be thus calculated by adding up the marginal utilities as follows:

Total utility at 2nd unit=Marginal Utility at 1st unit+Marginal utility at 2nd unit=10+8=18

Thus, the total utility at the 2^nd unit of consumption is 18 utils.

The total utility at 2^nd unit is calculated as 18. The total utility at the 3^rd unit is given as 25. Thus, the marginal utility of the 3^rd unit can be calculated as follows:

Marginal utility of 3rd unit=Total utility of 3rd unit−Total utility of 2nd unit=25−18=7

Thus, the marginal utility of the 3^rd unit is 7 utils.

Similarly, the total utility at the 4^th unit is 30 and the 3^rd unit is 25. The marginal utility of the 4^th unit can be calculated using the same equation as follows:

Marginal utility of 4th unit=Total utility of 4th unit−Total utility of 3rd unit=30−25=5

Thus, the marginal utility of the 4^th unit is 5 utils.

The total utility at the 4^th unit is given as 30 utils. The marginal utility from the 5^th unit is given as 3. So, the total utility from the 5^th unit can be calculated by adding these two together as follows:

Total utility of 5 units=Total utility of 4 units+Marginal utility of 5th unit=30+3=33

Thus, the total utility of 5 units is 33 utils.

The total utility of 6 units is given as 34. The total utility of 5 units is calculated as 33. Thus, the marginal utility of the 6^th unit can be calculated as follows:

Marginal utility of 6th unit=Total utility of 6th unit−Total utility of 5th unit=34−33=1

Thus, the marginal utility of 6^th unit is 1 util.

Thus, the table can be filled as follows:

Units consumed	Total utility	Marginal utility
0	0	0
1	10	10
2	18	8
3	25	7
4	30	5
5	33	3
6	34	1

The marginal utility starts from 10 and it starts to decline from 10 to 1, at the end. The marginal benefit thus shows a decline. Since the total utility is the addition of marginal utilities, because of the decline in the marginal utility, the total utility increases but at a diminishing rate.

Answer 9

(a):

Expert Solution

Answer 10

(a):

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Utility: It can be described as the benefit or the satisfaction that the consumption of a good or service provides to the consumer.

Total utility: It is the summation of all utilities derived, by the consumer, from the consumption of the individual units of a specific good or service.

Marginal utility: It is the extra satisfaction that a consumer derives from the consumption of an additional unit of the specific good or service.

Answer 13

(b):

To determine

Acceptability of the statement.

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

Answer 14

(b):

To determine

Acceptability of the statement.

Answer 15

(b):

Expert Solution

Explanation of Solution

The rational consumers in the economy try to maximize the total utility that they derive from the consumption of the goods and services. Thus, the decline in the marginal utility is not the reason which determines the quantity demanded. Thus, the individuals will try to maximize the total utility and thus, the statement is not agreeable. The marginal utility beyond the 1^st unit may be sufficiently great in terms of price. As a result, people will demand beyond the 1^st unit. Thus, the statement is not agreeable.

Answer 16

(b):

Expert Solution

Answer 17

(b):

Expert Solution

Answer 18

Expert Solution

Answer 19

(c):

To determine

Whether the given statement is acceptable.

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.

Answer 20

(c):

To determine

Whether the given statement is acceptable.

Answer 21

(c):

Expert Solution

Explanation of Solution

People compare the level of utility that they receive from the consumption of the goods and services with their respective prices. When the price of the commodity or service is higher than the total utility that the consumer receives from the very first unit of consumption, the rational consumer may decide not to purchase the item. Thus, the statement is agreeable.