Answer Happy

2. Utility (8 points) The study of utility is the basis of consumer theory. We studied both total utility and marginal utility a. As was covered, total utility will always increase at what rate increasing, constant, or decreasing)? Explain why it increases at this rate. b. The goal is to maximize the level of total utility. According to the Utility- Maximizing Rule, how do we know when we have maximized total utility? 3. Long Run Status (12 points) a. State the three regions of the long run average cost curve. Indicate what happens to the cost and productivity in each region.
EQUATIONS Marginal Utility (MU) = Change in Total Utility (TU) / Change in Output Marginal Product (MP) = Change in Total Product (TP) / Change in Labor Average Product (AP) = Total Product (TP) / Labor Total Cost (TC) = Total Fixed Cost (TFC) + Total Variable Cost (TVC) Average Fixed Cost (AFC) = Total Fixed Cost (TFC)/Total Product (TP) Average Variable Cost (AVC)= Total Variable Cost (TVC)/Total Product (TP) Average Total Cost (ATC) = Total Cost (TC)/ Total Product (TP) = Average Fixed Cost (AFC) + Average Variable Cost (AVC) Marginal Cost (MC)= Change in Total Cost (TC) / Change in Total Product (TP) = Change in Total Variable Cost (TVC)/ Change in Total Product (TP)
1. Product Choices You are trying to figure out what combination of Products A and B to buy, given that you currently have an income of $300.00 to spend. The price of product A is $100.00, while the price of product B is $50.00. Below is a list of the total and marginal utility you derive from consuming both products. PRODUCT A PRODUCT B Quantity Total Utility Marginal Utility Quantity Total Utility Marginal Utility 0 0 0 0 1 12000 1 5000 2 8000 2 4000 3 6000 3 3000 4 30000 4 2500 ANO AN a. Fill in the blanks in the table above. b. Given your income of $300.00, what combination of the two products will you purchase? C. What is the total utility you receive from this combination of goods that you chose in part b?
0 0 MO/PB 0 Product A TU MO то/fА o 12000 12000 130 20,000 8000 80 36,000 6000 70 30,000 Оооо 40 Dueodud B ΤΟ МО 0 5000 5000 9000 4000 19000 3000 19500 9500 Joo 80 2 3 4 2 3 (60 4 So (b) for aptinas, MOD PA The equiverd bundles au 23,9) and (3,3) அடிம் cost of Bundls, = MOB PB (22) - (9X100) +X50) = 300 - Income. . (3,3) = (3 X/00) +63x50) =450 > Income The preferred combination is (329) (c) TU Iucend ferontop) - 8000 20.000 +9,000 -29,000. +4000 =9,000