Economics - Ch.4 - Managerial Economics 6005 Homework -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Managerial Economics – 6005 Chapter: 4 4.1 Marginal Utility. A. complete the following table, which describes the demand for services: Price Units Total Utility Marginal Utility Price/Marginal Utility $80 0 0 --- --- 75 1 100 100 0.75 70 2 180 80 0.875 65 3 240 60 1.08 60 4 280 40 1.5 55 5 300 20 2.75 B. How does an increase in consumption affect marginal utility and the price/marginal utility ratio? C. What is the optimal level of services consumption if the marginal utility derived from the consumption of goods costs $1 per unit? 2 is the optimal level of services consumption where the marginal utility derived from the consumption of goods costs $1 per unit. 4.3 Law of diminishing marginal utility. Indicate whether each of the following statement us true or false. Explain why. A. The law of diminishing marginal utility states that as an individual increases consumption of a given product within a set period of time, the utility gained from consumption eventually declines. False . The law of diminishing marginal utility states that as an individual increases consumption of a given product within a set period of time, (the marginal or added utility, but not the utility itself) gained from consumption eventually declines. B. When prices are held constant, a diminishing marginal utility for consumption
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Economics - Ch.4 - Managerial Economics 6005 Homework -...

This preview shows document pages 1 - 2. Sign up to view the full document.

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