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Chapter 6: Q. 13 (page 152)

Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?

Short Answer

Expert verified

The products were purchased with a thought of increasing marginal utility.

Step by step solution

01

Step 1. Introduction:

Marginal utility is the surplus utility given by one extra unit of product. Each consumer aims to attain the highest level of satisfaction through the consumption of the commodities.

02

Step 2. Explanation:

The last thing purchased was groceries. The purchase was made with a thought of attaining the consumer equilibrium which is a point with highest level of satisfaction. However, the groceries were bought to attain the highest total utility level by keeping in mind the budget constraint. The purchase was carried out while keeping in mind if the buying a certain grocery was rational or necessary to purchase and will it fit my budget criteria.

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Most popular questions from this chapter

Take Jeremy鈥檚 total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremy鈥檚 utility.

Would you expect total utility to rise or fall with additional consumption of a good? Why?

As a college student you work at a part-time job, but your parents also send you a monthly 鈥渁llowance.鈥� Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?

Explain all the reasons why a decrease in a product's price would lead to an increase in purchases.

As a general rule, is it safe to assume that a change in the price of a good will always have its most significant impact on the quantity demanded of that good, rather than on the quantity demanded of other goods? Explain.
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