Question

Given your answers to Problems $F-5$and$F-7$, are Sue's preferences for soft drinks consistent with the law of demand?

Short answer

Total utility begins to decrease at this time, going from $11$to$10$ units.

Step-by-step solution

    Introduction

A graphical representation of total utility and usage per week is shown below. The various points on the total utility curve represent various levels of utility.

The consumption and total utility of per week are represented graphically above, with consumption on the $x$-axis and total utility on the y-axis. A total utility curve is defined as the line connecting the points $A$and$B$.

    Marginal utility

(a) The highest marginal utility, i.e. $5$units, is generated by points $A$to $B$in the diagram. The first week's marginal utility is$5$ units.

    Total utility

(b) As shown in the illustration, points $E$to $F$have zero marginal utility. The total utility is highest and constant at these positions, i.e.$11$ units.

     Graphical presentation

(c) The graph above illustrates that points $F$to $G$produce negative marginal utility, i.e. $-1$. Total utility begins to decrease at this time, going from $11$to$10$ units.