Points along an indifference curve represent bundles of goods that: decline in marginal utility. deliver equal utility. consumers don't like very much. cost the same amount to buy. cannot be compared.
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- Explain and differentiate preference and utility.Diminishing Marginal Utility. Explain the law of diminishing marginal utility Discuss an instance where you have experienced this. Do consumers continue to purchase something even though its marginal utility is decreasing? Why or why not?The above figure shows your budget line and indifference curves. What quantities of gasoline and movie rentals would you choose?
- Frank is purchasing products C and D in utility-maximizing amounts. If the price of C is $6 and the price of D is $3, then the marginal utility of D is twice that of C. the marginal utility of D is the same as that of C. the marginal utility of C is twice that of D. the relationship between the marginal utility of C and D cannot be determined.How to compute Marginal Utility.True/ False Marginal utility decline with the increase in the unit of consumption of a good.
- Describe the point at which a consumer maximizes utility.Susan buys bagels and falafels. The price of a falafels is £1 and the price of a bagels is £3. Susan has £12 to spend on bagels and falafels. a) Draw Susan's budget constraint and a possible indifference curve. Explain the assumptions behind the shape of the indifference curve you have drawn. b)If the price of falafels falls to £0.80 each, how will this affect her purchases? Answer in words and graphically, clearly indicating income and substitution effects of the price change. c) If Susan only enjoys bagels and falafels when she has 2 falafels for every bagel that she eats, draw her indifference curves. How many bagels and falafels should she buy to maximise her utility? Assume Susan has £12, one falafel costs £0.80 and bagels costs £3 each. d) Susan's friend Declan grows 100 potatoes each year and all of his income comes from selling them. He spends all of his income each year consuming potatoes and other goods. For Declan, potatoes are a Giffen good, in that for a given income his…When marginal utility is decreasing but positive, total utility is a increasing at a decreasing rate b increasing at an increasing rate c decreasing at a decreasing rate d decreasing at an increasing rate