Question

Difficulty: MediumLaw of Diminishing Marginal Utility

The table below shows the total utility (TUTU) and marginal utility (MUMU) derived by a consumer from consuming successive slices of meat pie:

Slices Consumed (QQ)Total Utility (TUTU) in utilsMarginal Utility (MUMU) in utils
11818
23214
34210
448XX
5480
640-8

What is the value of XX, representing the marginal utility derived from the 4th4^{\text{th}} slice of meat pie?

  1. 66 utilsAnswer
  2. B
    1212 utils
  3. C
    4848 utils
  4. D
    00 utils

Answer

The marginal utility of the 4th4^{\text{th}} slice (XX) is 66 utils.
Marginal utility is the change in total utility resulting from a one-unit change in consumption (MU=ΔTU/ΔQMU = \Delta TU / \Delta Q). For the 4th4^{\text{th}} slice, MU=4842=6MU = 48 - 42 = 6 utils.

Step-by-Step Solution

1
Identify the formula for Marginal Utility (MU)
MUn=TUnTUn1MU_n = TU_n - TU_{n-1}
Marginal utility measures the addition to total utility gained from consuming one extra unit of a good.
2
Extract Total Utility values for the 3rd3^{\text{rd}} and 4th4^{\text{th}} units from the schedule
TU3=42TU_3 = 42 utils and TU4=48TU_4 = 48 utils
These are the cumulative utility values before and after consuming the 4th4^{\text{th}} slice.
3
Calculate the value of XX
X=4842=6X = 48 - 42 = 6 utils
Subtracting TU3TU_3 from TU4TU_4 yields the additional utility contributed by the 4th4^{\text{th}} slice.

Key Concept

Calculation of Marginal Utility from Total Utility Schedule under the Law of Diminishing Marginal Utility
Estimated Time:1m 0s
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