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Total and Marginal Utility

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Complete the following table and answer the questions below:
Units Consumed Total Utility Marginal Utility
0 0 .
1 10 10
2 . 8
3 25
4 30 .
5 . 3
6 34 .

1. At which rate is total utility increasing: a constant rate, a decreasing rate, or an increasing rate? How do you know?
2. "A rational consumer will purchase only 1 unit of the product represented by these data, since that amount maximizes marginal utility." Do you agree? Explain why or why not.
3. "It is possible that a rational consumer will not purchase any units of the product represented by these data." Do you agree? Explain why or why not.

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Solution Summary

This solution computes for total and marginal utility. Some marginal utility data are left blank and solved using mathematical formula.

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Answers:

Units Consumed Total Utility Marginal Utility
0 0 -
1 10 10
2 18 8
3 25 7
4 30 5
5 33 3
6 34 1

Solution:

MU = (CTU-PrevTU) / Curr_Consump-Prevconsump

Where:

MU =Marginal Utility
CTU = Current Total Utility
PrevTU= Previous Total Utility
Curr_Consump = Current ...

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