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HW Econ 1

This document contains a table showing the total utility (TU), marginal utility (MU), and quantity consumed of a good X. It then asks 5 questions: 1) Calculate the MU using the equation and fill in the table. 2) Discuss that MU decreases with additional units of consumption. 3) The optimal quantity is 6 units as MU is 0 but becomes negative after. 4) Graph the TU and MU curves showing the optimum point. 5) Derive the demand curve from MU values and show two graphs, one for MU and one for the derived demand curve.

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Mhmd Karam
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59 views4 pages

HW Econ 1

This document contains a table showing the total utility (TU), marginal utility (MU), and quantity consumed of a good X. It then asks 5 questions: 1) Calculate the MU using the equation and fill in the table. 2) Discuss that MU decreases with additional units of consumption. 3) The optimal quantity is 6 units as MU is 0 but becomes negative after. 4) Graph the TU and MU curves showing the optimum point. 5) Derive the demand curve from MU values and show two graphs, one for MU and one for the derived demand curve.

Uploaded by

Mhmd Karam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name

Id

Quantity Consumed (QX) Total Utility (UX) Marginal Utility (MUX)


0 0  
1 50 50
2 90 40
3 105 15
4 116 11
5 120 4
6 120 0
7 115 -5
8 100 -15

Based on the Utility Theory and the above table, answer the following FIVE questions:

Find out Marginal Utility of X with each quantity consumed (write the MU equation, below and
fill in column number 3, above).

MUX = Change in TU/ Change in Q

(ii) Discuss the concept of Marginal Utility

It means the first unit of consumption of a good or service carries more


utility than subsequent units.
(iii) What is the optimum quantity of X that the consumer should consume (Consumer’s
Equilibrium Quantity)? And why?

Q=6 as the marginal uility=0 but after 6 uint the MU will be Negative

(iv) Graph the Total Utility and Marginal Utility curves, showing the equilibrium points.
U
140

120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9

MU
60

50

40

30

20

10

0
1 2 3 4 5 6 7 8

-10

-20
(v) Derive the demand curve from marginal utility, using the values of MUX as you found it in the
Table, above. Show two graphs (one for MUX and the second for the derived demand curve, as
explained in the class)

price =2 price =2.73


MU mu/2 MU/2.73
0    
50 25 18.3
40 20 14.7
15 7.5 5.5
11 5.5 4.0
4 2 1.5
0 0 0.0
-5 -2.5 -1.8
-15 -7.5 -5.5

Demand schedule

P Q

2.73 3

2 4
P
3
3; 2.73
2.5

2 4; 2

1.5

0.5

0
3 4

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