1) In the above table, Yang experiences negative marginal utility after consumin
ID: 1205583 • Letter: 1
Question
1) In the above table, Yang experiences negative marginal utility after consuming how many pieces of pizza?
A) 2 B) 4 C) 3 D) 5
2) In the above table, how much total utility does Yang get from consuming 4 sodas?
A) 10 utils B) 45 utils C) 125 utils D) 115 utils
3) In the above table, how much soda and pizza will Yang consume if the price of a piece of pizza is $2.00 and the price of a soda is $2.00?
A) 1 piece of pizza and 3 sodas B) 2 pieces of pizza and 2 sodas
C) 2 pieces of pizza and 3 sodas D) 3 pieces of pizza and 1 soda
Explanation / Answer
1. As seen in the table, marginal utility of pizza becomes negative on consuming 5th quantity of pizza.
Thus, correct choice is D. 5
2. Total utility from 4 sodas = 40 + 40 + 35 + 10 = 125 utils ie. choice c.
3.
Yang will prefer consuming 1st pizza the most as its utility is the highest at 45. Remaining budget = 8 - 2 = $6
Then he is indifferent between 1st and 2nd quantities of soda and 2nd quantity of pizza as they have the same utility. Thus he will consuming 2 sodas and 1 more pizza. Remaining budget = 6 - 2 - 2 - 2 = $0
Thus, total consumption = 2 pizzas and 2 sodas. ie choice B.
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