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Chapter 20: Q. 2 (page 452)

As an individual consumes more units of an item, the person eventually experiences diminishing marginal utility. This means that to increase marginal utility, the person must consume less of an item. Explain the logic of this behavior using the example in Problem 20-1.

Short Answer

Expert verified

Consumers should try other types of pizzas and other foods to increase their marginal utility.

Step by step solution

01

Step 1- Introduction

According to the law of diminishing returns, consumer buy a second item at a relatively low price. The law of marginal utility states that additional consumption does not satisfy consumers very much

02

Step 2- Explanation

Consumers receive higher utility by eating the first pizza and relatively less utility by eating the second pizza. As consumers eat pizza one after another, his marginal utility is less than before.

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Most popular questions from this chapter

The campus pizzeria sells a single pizza for \(12. If you order a second pizza, however, the pizzeria charges a price of only \)5for the additional pizza. Explain how an understanding of marginal utility helps to explain the pirzeria's pricing strategy.

Take a look at Table 20-1. Suppose that the price of each digital app rises to \( 5.97. At the same time, the price of each portable power bank falls to \) 2.70. Income remains unchanged at $ 26. Rework the marginal-utility-per-dollars-spent columns and round each amount to the nearest one-tenth. What are the quantities of digital apps and portable power banks now purchased by this consumer?

Refer to the table nearby. If the subscription price for a sports app is \(2per week, the subscription price of a game app is \)1per week, and a student has $9per week to spend, what quantities will she purchase at a consumer optimum?

Explain why it must be true, even for someone trying to lose weight, that the last bite of food consumed must have positive marginal utility at a consumer optimum?

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.
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