Suppose Joe derives 327 utils from consuming 1 dozen crab cakes and 11 pairs of socks.If he also derives 327 utils from 2 dozen crab cakes and 5 pairs of socks,Joe is indifferent between those combinations of crab cakes and socks.

Question

Quizplus · Accepted Answer

This scenario illustrates the concept of the law of diminishing marginal utility, where with each additional unit of consumption, the marginal utility decreases. Therefore, it is possible for Joe to reach the same level of total utility by consuming more of one good and less of the other, as long as the marginal utilities of each good are equal at the different consumption levels. In this case, Joe is indifferent between consuming 1 dozen crab cakes and 11 pairs of socks compared to 2 dozen crab cakes and 5 pairs of socks, indicating that the marginal utility per additional crab cake and per additional pair of socks is equal at those consumption levels.

Suppose Joe Derives 327 Utils from Consuming 1 Dozen Crab