1) Suppose that at a baseball game, you consumed 3 hot dogs (each priced at $5)
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Question
1) Suppose that at a baseball game, you consumed 3 hot dogs (each priced at $5) and 4 sodas (each priced at $3). The 3rd hot dog provided a marginal utility of 20, while the 4th soda provided a marginal utility of 15. In order to maximize utility, should you have changed your consumption? O a) No, you had maximized your utility. O b) Yes, you should have consumed more hot dogs and fewer sodas. c) Yes, you should have consumed more sodas and fewer hot dogs. Od) Yes, you should have consumed fewer of both hot dogs and sodas. Submit You currently have O submissions for this question. Only 10 submission are allowed. You can make 10 more submissions for this question. Survey Question) 2) Please provide your rationale for your answer to the previous question Submit You currently have O submissions for this question. Only 10 submission are allowed. You can make 10 more submissions for this question. 3) If you receive 10 units of utility from consuming one cup of coffee and 16 units of utility from consuming two cups of coffee, which of the following is the likely amount of utility you will receive from consuming three cups of coffee? Oa) 6 units of utility b) 18 units of utility c) 22 units of utility O d) 26 units of utility Submit You currently have 0 submissions for this question. Only 10 submission are allowed. You can make 10 more submissions for this question.Explanation / Answer
1) C. You should consumer more soda and fewer hotdogs.
2) The reason for the above choice is as follows-
Buying one hotdog costs $5 and gives 20 utils. Thus, we can say that each dollar provides you with 4 utils.
Buying a soda costs $3 and gives you 15 utils. Thus, we can say that each dollar gives you 5 utils
It can be seen clearly that spending one dollar on soda gives you more utility(5 units) than spending one dollar on hotdog(4 utils). Thus, consuming more soda and fewer hotdogs will maximise your utility.
3) B. (18 units of utility)
4) The reason for the above choice is as follows-
We know that according to the Law of Diminishing Marginal Utility, as consumption increases, the amount of utility dervied from each successive unit decreases, usually at a diminshing rate.
Thus utility derived from consuming the first cup is 10 utils and from the second cup is (16-10)=6 utils. The fall in utility is by 4 utils. Now if he consumes a third cup, the utility dervied will be less than 6 utils. Since we are assuming that utility is decreasing at a decreasing rate, the fall in utility should be greater than 4 utils. Therefore, the most feasible answer choice is answer B, i.e. 18 units of utility.
This means that the utility derived from the third cup is 2 units.
5) B. (He should consume more sushi)
6) The reason for the above choice is as follows-
Buying one sushi costs $5 and gives 20 utils. Thus, we can say that each dollar provides him with 4 utils.
Buying a sashami costs $10 and gives him 30 utils. Thus, we can say that each dollar gives him 3 utils
It can be seen clearly that spending one dollar on sushi gives you more utility(4 units) than spending one dollar on sashami(3 utils). Thus, consuming more sushi and less sashami will maximise his utility.
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