The table below shows the Total Utility (TU) obtained by a consumer from consuming successive packs of plantain chips: | Packs Consumed (Q) | Total Utility (TU) in utils | |---|---| | 1 | 10 | | 2 | 22 | | 3 | 30 | | 4 | 34 | | 5 | 34 | | 6 | 30 | At which pack of plantain chips does the Law of Dimi

The table below shows the Total Utility (TU) obtained by a consumer from consuming success… — JAMB UTME

The table below shows the Total Utility ( $TU$ ) obtained by a consumer from consuming successive packs of plantain chips:

Packs Consumed ( $Q$ )	Total Utility ( $TU$ ) in utils
$1$	$10$
$2$	$22$
$3$	$30$
$4$	$34$
$5$	$34$
$6$	$30$

At which pack of plantain chips does the Law of Diminishing Marginal Utility FIRST set in for this consumer?

A
The $2^{\text{nd}}$ pack
The $3^{\text{rd}}$ packAnswer
C
The $5^{\text{th}}$ pack
D
The $6^{\text{th}}$ pack

Answer

The Law of Diminishing Marginal Utility first sets in at the

3^{\text{rd}}

pack.

The Law of Diminishing Marginal Utility states that after a certain point, consuming additional units of a good yields progressively less extra satisfaction. Computing

MU = \Delta TU / \Delta Q

shows that

MU_1 = 10

MU_2 = 12

, and

MU_3 = 8

. Because marginal utility increases from the

1^{\text{st}}

to the

2^{\text{nd}}

pack and then drops for the

3^{\text{rd}}

pack, diminishing marginal utility first begins with the consumption of the

3^{\text{rd}}

pack.

Step-by-Step Solution

Calculate the Marginal Utility (

MU

) for each successive pack using the formula

MU_n = TU_n - TU_{n-1}

MU_1 = 10 - 0 = 10

utils;

MU_2 = 22 - 10 = 12

utils;

MU_3 = 30 - 22 = 8

utils;

MU_4 = 34 - 30 = 4

utils;

MU_5 = 34 - 34 = 0

utils;

MU_6 = 30 - 34 = -4

utils.

Marginal utility measures the extra utility derived from consuming one additional unit of a commodity.

Analyze the trend of Marginal Utility (

MU

) values to identify where

MU

begins to decrease.

From the

1^{\text{st}}

to the

2^{\text{nd}}

pack,

MU

increases from

10

12

utils. From the

2^{\text{nd}}

to the

3^{\text{rd}}

pack,

MU

falls from

12

8

utils.

The Law of Diminishing Marginal Utility states that as more units of a commodity are consumed, the additional satisfaction derived from consuming each additional unit eventually decreases.

Determine the exact unit at which the decline in

MU

first occurs.

The decline in

MU

starts upon consumption of the

3^{\text{rd}}

pack.

The

3^{\text{rd}}

pack is the first unit where marginal utility (

8

utils) is less than the marginal utility of the preceding unit (

12

utils).

Key Concept

Onset of the Law of Diminishing Marginal Utility

Estimated Time:1m 0s

Question

Answer

Step-by-Step Solution

Key Concept

Common Mistakes

Topics

More questions from this topic