Question 1

-Margo buys music CDs and movies on DVDs. The table above shows her total utility from each good.
a) Draw graphs showing Margo's utility from music CDs and from movies on DVDs.
b) Compare the two utility graphs. Describe Margo's preferences.
c) Draw graphs that show Margo's marginal utility from music CDs and from movies on DVDs.
d) What do the two marginal utility graphs tell you about Margo's preferences?

Accepted Answer

The answer of 
-Margo buys music CDs and movies on...

Question 2

The Paradox of Value is resolved by the willingness for an individual to pay a high price for a good or service that has a high marginal utility per dollar.

Accepted Answer

The answer of The Paradox of Value is resolved by...

Question 3

-Sarah spends $100 a year on magazines and ice cream. The table above shows her utility from each good. If the price of a magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend the $100?

Accepted Answer

The answer of 
-Sarah spends $100 a year on magazines...

Question 4

Tom's marginal utility of Mountain Dew exceeds his marginal utility of crackers at his consumer equilibrium. Therefore, his consumer surplus from Mountain Dew must exceed his consumer surplus from crackers.

Accepted Answer

The answer of Tom's marginal utility of Mountain Dew exceeds...

Quiz 8: Utility and Demand

The Paradox of Value is resolved by the willingness for an individual to pay a high price for a good or service that has a high marginal utility per dollar.

-Sarah spends $100 a year on magazines and ice cream. The table above shows her utility from each good. If the price of a magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend the $100?

Tom's marginal utility of Mountain Dew exceeds his marginal utility of crackers at his consumer equilibrium. Therefore, his consumer surplus from Mountain Dew must exceed his consumer surplus from crackers.