Classwork - Chapter 21: Consumer Theory

The following questions need to be answered clearly on your A4 notebook used for this course. You will need to take pictures of your work and send them to me through Google Classroom. This needs to be done during today's class. It cannot be submitted later.

You need to answer the questions in the following format:

Page 1: Q1 (a) - copy the table, do the calculations and answer parts i) and ii).

Page 2: Q1 (b) - each graph needs to be approximately half page in size. All the axis need to be labeled. The TU values need to scaled as follows: 10, 20, 30, 40, 50, 60 - with 2 cm gaps.

The MU values need to be scaled as follows: -5, 0, 5, 10, 15 - with 2 cm gaps.

Graphs need to be drawn with a pen (not pencil) and using a ruler.

Page 3: Q2. (a) - (d) written clearly in large letters

Q1. a) Complete the table below:

Quantity of Cheese Cakes

(slices per day)

Total Utility (TU)

Marginal Utility (MU)

1

20

2

36

3

48

4

55

5

50

i) After how many slices do you get bored of Cheese cakes?

ii) After how many slices do you feel sick?

b) Using the values from the above table, "Plot" (on separate graphs)

i) Total Utility

ii) Marginal Utility graphs

Q2. You drink only Coffee or Orange juice

Price of Coffee

(dollars per cup)

Marginal Utility of Coffee (for 1st cup)

Price of Orange Juice (dollars per glass)

Marginal Utility of Orange Juice (for 1st glass)

$3

60

$2

50

a)Calculate the MU per dollar for Coffee

b)Calculate the MU per dollar for Orange Juice

c)If you have 1 cup of Coffee and 1 glass of Orange juice, are you in Equilibrium? Explain briefly.

d)If not, how should you change your consumption of these 2 items?