The table below presents the Total Utility () and Marginal Utility () derived by a consumer from drinking successive bottles of fruit juice on a warm day:
| Quantity Consumed () | Total Utility () in utils | Marginal Utility () in utils |
|---|---|---|
| 1 | 24 | 24 |
| 2 | 42 | 18 |
| 3 | 12 | |
| 4 | 60 | |
| 5 | 60 | 0 |
| 6 | 52 | -8 |
Based on the table, what are the values of and , and at which quantity consumed is the consumer's point of satiety reached?
- , , and satiety is reached at the 5th unit.Answer
- B, , and satiety is reached at the 4th unit.
- C, , and satiety is reached at the 6th unit.
- D, , and satiety is reached at the 3rd unit.
Answer
, , and the point of satiety is reached at the 5th unit of consumption.
To find , add the marginal utility of the 3rd unit () to the total utility of the 2nd unit (), giving . To find , subtract the total utility of the 3rd unit () from the total utility of the 4th unit (), giving . The point of satiety is the level of consumption where marginal utility reaches zero and total utility is maximized ( utils at units). Thus, the option stating , , and satiety at the 5th unit is correct.
Step-by-Step Solution
Key Concept
Relationship between Total Utility and Marginal Utility; Point of Satiety