1. Suppose Table 1 shows your demand schedule for cans of soda.

(a) What is your total utility from three cans of soda?

(b) What is your marginal utility from the third can of soda?

(c) If price were $1.50, how much would your consumer surplus be?

 

2. Suppose Table 2 shows your demand schedule for CDs.

(a) What is your total utility from four CDs?

(b) What is your marginal utility from the fourth CD?

(c) If the price is $2, how much will your consumer surplus be?

 

3. Suppose that at three units purchased, marginal utility is $8 and total utility is $30. If the marginal utility of the fourth unit purchased is $6, how much is the total utility of four units?

4. You're in the desert on an extremely hot day and become quite thirsty. Luckily you come upon a stand where they're selling bottled water. You would be willing to pay $10 for the first bottle, $5 for the second bottle, and $1 for the third. Luckily they're charging just a dollar.

(a) How many bottles do you buy?

(b) How much is your marginal utility from the third bottle?

(c) How much is the total utility you will get from the three bottles? (d) How much is your consumer surplus?

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TABLE 1 TABLE 1

Answer rating: 100% (QA)

1 a Total utility expressed as dollar value is 300200150 650 b Since you would be willin... View the full answer