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Consumer Choice Theory: Marginal Utility of Chicken Pieces

The table below shows the maximum amount of money you would be willing to pay for increasing numbers of chicken pieces at Fastfood:

Chicken Pieces Maximum Payment

1 $2.00
2 3.80
3 5.40
4 6.80
5 8.00
6 9.00
7 9.80
8 10.40
9 10.80
10 11.00
11 11.00

a) Find the marginal utility for each chicken piece. What is the meaning of the marginal utility of the 11th piece?
b) If the price of chicken pieces is $1.25 each, how many will you buy?
c) If the price falls to $.50, how many will you buy? Explain carefully why you will not buy one more.
d) What is the consumer surplus, or net benefit, that you get from purchasing chicken pieces at $.50?


Solution Preview

a) See the attached file. My marginal utility (MU) for each piece can be measured by the amount of money that I would be willing to pay to get it. The MU of the 11th piece is zero, which means that I would eat ...

Solution Summary

This solution uses marginal analysis to predict how many pieces of chicken I will consumer at a given price.