Total Utility
Marginal Utility
Isoutility
Random
100
What is the unit of satisfaction?
Utils
100
What is the definition of Marginal Utility?
change in utility (satisfaction) due to the change in consumption of goods
100
What is another word for Isolutiity Curves?
Indifference Curves
100
How do you calculate the change of something?
subtract
200
What is the definition of Total Utility?
the total satisfaction derived from consuming a given bundle of goods
200
How do you calculate Marginal Utility?
MU= change in utility/change in good
200
What is an Isoutility Curve?
represents the combination of consumption bundles that provide a consumer a given level of satisfaction
200
When Total Utility reaches it's peak, what happens to Marginal Utility?
MU reaches 0
300
How do you calculate Total Utility?
TU= Qty Good A X Qty of Good B
300
Why does marginal utility decline as the consumption of goods increase?
too much of a good thing is bad
300
What do we call the slope of an Isoutility Curve?
marginal rate of substitution
300
If two bundles have the same level of TU, the consumer is __________ to them.
Indifferent; they could choose either one to consume and be just as satisfied
400
If a consumer consumes 12 bananas and 3 apples, what is their total utility?
TU = 36
400
What is the Law of Diminishing Marginal Utility?
as consumption increases, marginal utility decreases
400
What does the marginal rate of substitution tell us about a consumer?
how much of one good they are willing to give up to gain another good, while maintaining the same level of satisfaction
400
As the consumption of a good increases, Marginal Utility _______________.
decreases/declines
500
Which bundle would a consumer have a higher preference for?
Bundle A: 12 tacos & 4 sodas
Bundle B: 10 tacos & 5 sodas
Bundle C: 8 tacos & 6 sodas
Bundle B
TU= 50
500
Calculate MU for the following scenario:
When Tom consumes 8 hot dogs in a week, his TU is 45. When he consumes 9 hot dogs, his TU is 53.
Show your work!
MU=
(53-48)/(9-8)=
8/1= 8
500
How do you calculate the Marginal Rate of Substitution?
MRS= change in good A/ change in good B
500
Calculate the MRS for the goods below:
-3