Complete the following table of Scout’s utility from drinking cans of soda and a
ID: 1218473 • Letter: C
Question
Complete the following table of Scout’s utility from drinking cans of soda and answer the questions below.
30
a. At what point does marginal utility begin to fall?
Marginal utility falls with the (1st, 2nd, 3rd, 4th, 5th, 6th, 7th)
b. Will Scout consume the 7th can of soda? Explain your answer.
No, because it is too expensive.
c. True or false? Scout will be following the utility-maximizing rule by consuming 2 cans of soda. Explain your answer.
Cans of Soda Total Utility Marginal Utility 0 1 2 18 10 330
4 10 5 8 6 52 7 50Explanation / Answer
a) At point 4th marginal utility begin to fall.Because at point 3 total utility is 30 and at point 2 total utility is 18.As we know marginal utility equal change in total utility divided by change in quantity, so we can calculate that marginal utility for 3 cans of soda is 12.And at 4th point marginal utility is 10.So my answer is justified.
b) No, Scout will not consume 7th can of soda because its marginal utilty is 2 which is less than 6th and its follows law of diminishing marginal utility.That is after a certain point marginal utility for consuming one unit of extra good leads to fall in marginal utility of that item.
c) No, Scout will not stop consuming after 2 cans of soda by following his utility-maximizing rule.Because at point 3 his marginal utility is 12 and at that point his utility is maximized by the Utility-maximizing rule. So the answer is, the statement is False. Scout is not following the utility-maximizing rule because he can gain more utility by consuming the 3rd can of soda.
Cans of Soda Total Utility Marginal Utility 0 0 0 1 8 8 2 18 10 3 30 12 4 40 10 5 48 8 6 52 4 7 50 -2