contestada

The marginal utility for the third unit of X is 63 utils, and the marginal utility for the fourth unit of X is 56 utils. Assume that, in this case, utility can only take on whole number, integer, values measured in utils.
If the law of diminishing marginal utility holds, the minimum total utility of consuming four units of X is_______ utils.

Respuesta :

Answer:

248 UTILS

Explanation:

Total Utility is the total satisfaction from consumption of all units of a good.

Marginal Utility is the additional satisfaction from consuming an additional unit of a good.

TU = ΣMU ; MU = TUn - TUn-1

Law of Diminishing Marginal Utility states : A good's units of consumption increase makes it additional satisfaction i.e MU to rise lesser in the successive unit than in the preceding one. Eg - A thirsty person will get higher satisfaction from the 1st glass of water than the 2nd glass.

If the case gIven follows Law of DMU : (Given- MU@4th unit < MU@3rd unit) i.e (56<63) ; Following must would have been the case :

MU@1st unit > MU@2nd unit > MU@3rd unit - First two MUs would at least be 65, 64 (least possible whole no. integer values > 63).

So , Minimum TU (1..4) = ΣMU = 65 + 64 + 63 + 56 = 248 utils

Otras preguntas