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Unit 5
[Microeconomics]
Unit 5 Assignment: The Rational Consumer
Name:
Course Number:
Section Number:
Unit Number:
Date:
-5
-
Newspaper vending machines are designed so that once you have paid for one paper; you
have access to all the papers in the machine and could take multiple papers at a time.
However, other vending machines dispense only one item (the item you bought). You do not
have access to all the goods (sodas, candy, snacks, etc.) at one time.
1. Using the concept of marginal utility, explain why these vending machines differ?
Amy is shopping at a dollar store. She is currently buying 5 bracelets that cost $1 each and 4
sodas that cost $1 each. The table below indicates the marginal utility she obtains when she
purchases this combination.
Quantity
Price per Unit
MU per unit
Bracelets
5
$1
30
Sodas
4
$1
40
2. A consumer maximizes utility when the last dollar spent on any good generates the
same satisfaction as the last dollar spent on every other good. Is this consumer
maximizing her utility?
3. If not, should she consume more bracelets or more sodas? Explain.
Answer the following assuming that one more bracelet is purchased and one less soda is
consumed:
4. Recall the law of diminishing marginal utility. What happens to the Marginal Utility of
bracelets and the Marginal Utility of soda?
Unit 5
[Microeconomics]
5. What happens to the Total Utility received?
6. What happens to the total dollars spent?
--------------------References:
Unit 5
[Microeconomics]
Unit 5 Assignment: The Rational Consumer
Name:
Course Number:
Section Number:
Unit Number:
Date:
-5
-
Newspaper vending machines are designed so that once you have paid for one paper; you
have access to all the papers in the machine and could take multiple papers at a time.
However, other vending machines dispense only one item (the item you bought). You do not
have access to all the goods (sodas, candy, snacks, etc.) at one time.
1. Using the concept of marginal utility, explain why these vending machines differ?
Amy is shopping at a dollar store. She is currently buying 5 bracelets that cost $1 each and 4
sodas that cost $1 each. The table below indicates the marginal utility she obtains when she
purchases this combination.
Quantity
Price per Unit
MU per unit
Bracelets
5
$1
30
Sodas
4
$1
40
2. A consumer maximizes utility when the last dollar spent on any good generates the
same satisfaction as the last dollar spent on every other good. Is this consumer
maximizing her utility?
3. If not, should she consume more bracelets or more sodas? Explain.
Answer the following assuming that one more bracelet is purchased and one less soda is
consumed:
4. Recall the law of diminishing marginal utility. What happens to the Marginal Utility of
bracelets and the Marginal Utility of soda?
Unit 5
[Microeconomics]
5. What happens to the Total Utility received?
6. What happens to the total dollars spent?
--------------------References:
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