This question examines the utility that a consumer derives from consuming various quantities of oranges. You will
Question:
This question examines the utility that a consumer derives from consuming various quantities of oranges. You will determine whether oranges satisfy the law of diminishing marginal utility, identify the total utility associated with consuming a particular quantity of oranges, and calculate the marginal utility per dollar spent at different prices.
Suppose Joshua consumes only oranges. Below, you are provided with the marginal utility that each orange provides Joshua.
Task 1: Complete the table below by calculating the total utility, or satisfaction, that Joshua enjoys when he consumes each quantity of oranges.
| Quantity of Oranges | Marginal Utility | Total Utility |
| 1 | 35 | |
| 2 | 30 | |
| 3 | 25 | |
| 4 | 20 | |
| 5 | 15 | |
Task 2: Does Joshua’s preference for oranges satisfy the law of diminishing marginal utility?
Task 3: Suppose that the price of an orange is $0.50. What is the marginal utility per dollar spent of the 4th orange?
Task 4: Suppose that the price of an orange is $1. What is the marginal utility per dollar spent of the 4th orange?
Task 5: Does the marginal utility per dollar spent on oranges increase or decrease with the price of oranges increases?
Expert Answer:
