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Chapter 20: Q. 10 (page 452)

Draw a marginal utility curve corresponding to the total utility curve depicted in Problem 20-9.

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01

   Introduction

Changes in total utility are used to calculate a marginal utility curve. Changes in the total utility curve determine the slope of the marginal utility curve. A marginal utility curve is depicted graphically in the diagram below.

The marginal utility curve slopes downhill from left to right, as seen in the diagram above. When the total utility reaches its maximum, the marginal utility falls to zero.

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Most popular questions from this chapter

Explain why an optimal choice of how much to consume entails equalizing the marginal utility per dollar spent across all items.

From the data in Problem 20-3, if the price of a cheeseburger is \(2, the price of a bag of french fries is \)1, and you have $1 to spend (and you spend all of it), what is the utility-maximizing combination of cheeseburgers and french fries?

Your classmate tells you that he is indifferent between three soft drinks and two hamburgers or two soft drinks and three hamburgers.

a. Draw a rough diagram of an indifference curve containing your classmate's consumption choices.

b. Suppose that your classmate states that he is also indifferent between two soft drinks and three hamburgers or one soft drink and four hamburgers, but that he prefers three soft drinks and two hamburgers to one soft drink and four hamburgers. Use your diagram from part (a) to reason out whether he can have these preferences.

Return to Problem 20-4. Suppose that the price of cheeseburgers falls to $1. Determine the new utility maximizing combination of cheeseburgers and french fries.

Draw a marginal utility curve corresponding to the total utility curve depicted in Problem 20-9.
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