Utility schedule Quantity of goods consumed Total Utility Marginal Utility 0 0 0 1 10 10 2 16 - 3 - 4 4 - - 5 23 1 6 23 - (a) Complete the above utility sch...
Question 1 Report
Utility schedule
| Quantity of goods consumed | Total Utility | Marginal Utility |
| 0 | 0 | 0 |
| 1 | 10 | 10 |
| 2 | 16 | - |
| 3 | - | 4 |
| 4 | - | - |
| 5 | 23 | 1 |
| 6 | 23 | - |
(a) Complete the above utility schedule
(b) Draw the marginal utility curve
C(i) At what quantity does TU equal MU?
(II) What is the value of MU when TU reaches the maximum?
(iii) What happens to the values of TU as the quantity consumed increases?
(iv) What happens to the values of MU as the quantity consumed increases?
Answer Details
(a) Completed utility schedule
| Quantity of goods consumed (Q) | Total Utility (TU) | Marginal Utility (MU) |
|---|---|---|
| 0 | 0 | 0 |
| 1 | 10 | 10 |
| 2 | 16 | 6 |
| 3 | 20 | 4 |
| 4 | 22 | 2 |
| 5 | 23 | 1 |
| 6 | 23 | 0 |
Using \(MU_n = TU_n - TU_{n-1}\):
\(MU_2=16-10=6\); \(TU_3=16+4=20\); \(TU_4=23-1=22\); \(MU_4=22-20=2\); \(MU_6=23-23=0\).
(b) Marginal utility curve
(c)(i) TU equals MU at 0 unit, where both are 0, and at 1 unit, where both are 10.
(ii) TU is at its maximum value of 23 units from the 5th unit onward. MU is 1 at the 5th unit and becomes 0 at the 6th unit, when TU no longer increases.
(iii) As quantity consumed increases, TU increases at a decreasing rate and finally remains constant at 23 units.
(iv) As quantity consumed increases, MU diminishes, falling from 10 to 0.
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