Use diminishing marginal utility to explain why millionaires often do not have many homes, even if they can afford it.
economics
Description
questions
1- Use
diminishing marginal utility to explain why millionaires often do not have many
homes, even if they can afford it.
2- Can
marginal utility be negative? Briefly
explain with an example.
3- Using
graphs, show the relationship between production and costs, by using marginal
Product of labor (MPL), Average Product of labor (APL), Marginal cost (MC), and
Average Cost (AC) curves?
4- State
the three cases of Returns to scale. Explain when each case could be realized
Columns 1 through 3 in the table below show the marginal
utility which a particular consumer would get by purchasing various quantities
of products A, B, and C.
|
Unit of product |
(1) Marginal utility, MUA |
|
(2) Marginal utility, MUB |
|
(3) Marginal utility, MUC |
|
|
First |
18 |
|
39 |
|
12 |
|
|
Second |
16 |
|
36 |
|
10 |
|
|
Third |
14 |
|
33 |
|
9 |
|
|
Fourth |
12 |
|
30 |
|
8 |
|
|
Fifth |
10 |
|
27 |
|
7 |
|
|
Sixth |
8 |
|
24 |
|
5 |
|
|
Seventh |
6 |
|
21 |
|
3 |
|
If the prices of A, B, and C are $2, $3, and $1,
respectively, and the consumer has $26 to spend on these three products, what
combination of the three products should be purchased in order to maximize
utility?
