Complete the following table and answer the questions below: Units Consumed

Complete the following table and answer the questions below:...

Complete the following table and answer the questions below: $$\begin{array}{ccc} \begin{array}{c} \text { Units } \\ \text { Consumed } \end{array} & \text { Total Utility } & \text { Marginal Utility } \\ \hline 0 & 0 & \\ 1 & 10 & 10 \\ 2 & - & 8 \\ 3 & 25 & - \\ 4 & 30 & - \\ 5 & - & 3 \\ 6 & 34 & - \end{array}$$ a. At which rate is total utility increasing: a constant rate, a decreasing rate, or an increasing rate? How do you know? b. "A rational consumer will purchase only 1 unit of the product represented by these data since that amount maximizes marginal utility." Do you agree? Explain why or why not. c. "It is possible that a rational consumer will not purchase any units of the product represented by these data." Do vou agree? Explain why or why not.

Complete the following table and answer the questions below:
$$\begin{array}{ccc}
\begin{array}{c}
\text { Units } \\
\text { Consumed }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \\
\hline 0 & 0 & \\
1 & 10 & 10 \\
2 & - & 8 \\
3 & 25 & - \\
4 & 30 & - \\
5 & - & 3 \\
6 & 34 & -
\end{array}$$
a. At which rate is total utility increasing: a constant rate, a decreasing rate, or an increasing rate? How do you know?
b. "A rational consumer will purchase only 1 unit of the product represented by these data since that amount maximizes marginal utility." Do you agree? Explain why or why not.
c. "It is possible that a rational consumer will not purchase any units of the product represented by these data." Do vou agree? Explain why or why not.

Key Concepts

Total Utility and Marginal Utility

Total utility represents the overall satisfaction or benefit a consumer receives from consuming a certain quantity of goods, while marginal utility is the additional satisfaction gained from consuming one more unit. The relationship between these two measures is fundamental in understanding consumer behavior because the change in total utility when an extra unit is consumed is exactly the marginal utility of that unit.

Diminishing Marginal Utility

The law of diminishing marginal utility states that as a consumer consumes more units of a good, the additional satisfaction (marginal utility) derived from each additional unit tends to decrease. This concept explains why the total utility increases at a decreasing rate as consumption rises, and it serves as a cornerstone for analyzing how consumers decide the optimal quantity of goods to purchase based on the incremental benefits each unit provides.

Consumer Decision Making and Utility Maximization

Rational consumers make purchasing decisions by comparing the marginal utility derived from each additional unit of a good to its cost (or opportunity cost). They continue consuming additional units as long as the marginal utility is positive and exceeds the marginal cost. This decision-making process involves not just focusing on the highest marginal utility, but on the cumulative total utility and the benefits versus the costs of additional consumption.

Non-Purchase Decision and the Threshold of Utility

Sometimes a rational consumer may choose not to purchase any units of a product if the initial marginal utility is not sufficiently positive or if the costs outweigh the benefits. This possibility reflects the idea that consumption decisions are based on whether the utility gained from the first unit justifies the expenditure, thereby setting a threshold that can result in zero consumption if that benefit is absent or too low.

Transcript

00:01 So we're to complete the table we're giving and answer the questions.

00:05 So i'm going to be drawing the table.

00:08 So we're giving the units consumed.

00:12 We're giving the total utility or we're giving the marginal utility.

00:31 So we're giving units 1 to 6.

00:37 And they were giving the total utility at 0, 10, then we're to find the third one.

00:44 Then we have 25, 30, they were to find the fifth one, then we have 34.

00:52 And then the total utility is 10, 8, what to find the third, the fourth one, and then the sixth one, two.

01:02 So the first question says at which rate is total utility increasing, a constant rate, decreasing rate, or increasing rate.

01:13 So before we can complete that we can answer that we can have to complete the missing values of the total utility and marginal utility so unit consumed we need to know you need to consume is q total utility is tu imaginary utility is tun n minus cu n minus 1 that to say that the tu of the value which is going to be this minus the tu of n minus 1 so therefore let's start with the third one the marginal utility for that before we can do that giving the formula by giving we have to find the total utility for the rest of the table so this is going to be 18 if we use the formula and the fifth one is going to be 33 and then the marginal utility will basically be 25 minus 18 and that's 7 and then 25 minus 30 minus 25 and that's 5 and then 33 minus 30 and that's 3 now 34 minus 33 and that's 1 so now there are fielding the table the first question total utility will be increasing at the decreasing rates because if you go back the total utility is increasing at a decreasing rate as the marginal utility is declining for every additional incident so basically as total utility is increasing so is the marginal utility declining for every additional units consumed so total utility is is increasing at a decreasing rate as the marginal utility is declining for every additional units consumed so that's the answer now the second part of the question a rational consumer will purchase only one unit of the product represented by the data since that amount maximizes marginal utility...

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