Authors libby rittenberg 405
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10. Suppose that you are a utility maximizer and so is your economics
instructor. What can you conclude about your respective marginal
rates of substitution for movies and concerts?
NUMERICAL PROBLEMS
1. The table shows the total utility Joseph derives from eating pizza
in the evening while studying.
Pieces of pizza/evening Total Utility
0
0
1
30
2
48
3
60
4
70
5
78
6
80
7
76
1. How much marginal utility does Joseph derive from the third
piece of pizza?
2. After eating how many pieces of pizza does marginal utility
start to decline?
3. If the pizza were free, what is the maximum number of pieces
Joseph would eat in an evening?
4. On separate diagrams, construct Joseph’s total utility and
marginal utility curves for pizza. Does the law of diminishing
marginal utility hold? How do you know?
2. Suppose the marginal utility of good A is 20 and its price is $4, and the
marginal utility of good B is 50 and its price is $5. The individual to
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
405
