The table shows the maximum amount of money you would be willing to pay for incr
ID: 1168200 • Letter: T
Question
The table shows the maximum amount of money you would be willing to pay for increasing numbers of veggie sushi pieces at Oishii Sushi:
Sushi Pieces
Maximum Payment
1
$2.00
2
3.80
3
5.40
4
6.80
5
8.00
6
9.00
7
9.80
8
10.40
9
10.80
10
11.00
11
11.00
Find the marginal utility for each sushi piece. What is the meaning of the marginal utility of the 11th piece?
If the price of sushi pieces is $1.25 each, how many will you buy?
If the price falls to $.50, how many will you buy? Explain why you will not buy one more.
Suppose Oishii stops selling sushi pieces individually, and only sells them in rolls, each containing 5 pieces. The price of a roll is $2.50. How many total sushi pieces will you consume? Reconcile your answers to c) and b).
What is the consumer surplus, or net benefit, that you get form purchasing sushi pieces at $.50 as in c)?
Sushi Pieces
Maximum Payment
1
$2.00
2
3.80
3
5.40
4
6.80
5
8.00
6
9.00
7
9.80
8
10.40
9
10.80
10
11.00
11
11.00
Explanation / Answer
Marginal utility per piece is as follows:
First piece: $2.00
Second piece : $1.80
Third piece: $1.60
Fourth piece: $1.40
Fifth piece: $1.20
Sixth piece: $1.00
Seventh piece: $0.80
Eight piece: $0.60
Ninth piece: $0.40
Tenth piece: $0.20
Eleventh piece: $0.00
The meaning of marginal utility of the 11th piece is that the utility derived by consuming 11th piece. In this case, we will get zero utility by consuming 11th piece.
We will not buy any more piece either at $1.25 or at $0.50 per piece, as there is no utility derived by consuming the additional piece. There is zero utility after consuimg 10 pieces.
If the price per roll is $2.50 (per 5 piece), we will buy two rolls by paying $5 as there is no utility after 10 pieces.
In other case, we will buy 10 pieces by paying total $5 at $0.50 per piece.
As in both case, the value paid is same , there would be no benefit or loss.
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