3. ....... 4........ 5........ See the picture! SHORT-ANSWER QUESTIONS 1. What i

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3. ....... 4........ 5........
See the picture!
SHORT-ANSWER QUESTIONS 1. What is marginal utility? Explain why you're maximizing utility when the ratios of the marginal utility to the pricé of goods are equal. 5. of when a consumer consumes a c co doo, hegets more uhlitgine renses s some utiltWhen he consumes more Suppose you and your friend are studying hard for an economics exam. You have a craving for double cbeese pizza. You order a large. Your mouth is watering as you sink your teeth into the first slice. Oh, the pleasure! You eagerly reach for the second slice. The additional pleasure that you get from this slice is less than that from the first. The third and fourth slice esch give you even less pleasure What principle does this describe? State the principle in general terms. 2. Suppose you had $8 to spend. You like going to see Ben Affeck movies a lot, but you like to see John Turturro movies even more. If these were your only choices to spend the $8 on, which movie would you go to see? Sbow how your choice follows the principle of rational choice 3. What are the formulas that embody the principle of rational choice? 4.

Explanation / Answer

2. Law of diminishing marginal utility.

Law of diminishing marginal utility states that as more and more units of a commodity are consumed, marginal utility derived from each additional utility declines.

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