Homework 3-1

Homework 3-1 - 2. Describe the law of diminishing marginal...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Spring 2009 Name: ___________________ ECON 203: Principles of Microeconomics TA: ______________________ Homework 3 (10 points) Due in discussion the week of March 9 th - 13 th ; No late HWs will be accepted 1. Fill in the following table on the total and marginal utilities of a certain product A. Use your results to answer the following questions. Units of product A Total utility Marginal utility 0 0 1 20 _____ 2 35 _____ 3 _____ 10 4 _____ 5 5 _____ 0 6 45 _____ 7 35 _____ 8 _____ –15 (a) Graph both the total utility and marginal utility curves together on the same graph. (2 points for filling in the table and drawing the graph)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(b) Explain the shape of both of the curves. (2 points) (c) Identify the point where utility is maximized on both curves. Discuss the reasoning behind each value. (2 points)
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2. Describe the law of diminishing marginal utility. On what assumptions is this law based? (2 points) 3. 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, A (2) Marginal utility, B (3) Marginal utility, C 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? (2 points)...
View Full Document

This note was uploaded on 06/16/2009 for the course ECON 203 taught by Professor Al-sabea during the Spring '05 term at USC.

Page1 / 3

Homework 3-1 - 2. Describe the law of diminishing marginal...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online