Marginal Utility?

Question

Suppose the marginal utility per last dollar spent on cookies is greater than the marginal utility per last dollar spent on milk. Assuming a consumer purchases only cookies and milk, what should the consumer do if she wishes to increase her total utility from the consumption of these two goods? Why?

Answer 1

Buy more cookies. Marginal utility is a measure of the increased satisfaction an individual gets from additional units of a certain good, in this case cookies. Buying more milk when his marginal utility for the product is on the wane means that he has reached his satiation point for milk, a point where he wants to eat more cookies, but can't drink another drop of milk. To maximize his marginal utility, he would logically spent his last dollar on cookies..

Answer 2

I have never heard of marginal utility, I also have a macroeconomics book here and I couldn't find it in the index. If you don't mind I would appreciate an explanation of the term. Without knowing the term my take would be that if the consumer only purchases cookies and milk, the marginal utility is irrelevant. All of the consumers money will be spent only, and equally on the two as they are complimentary goods, in my mind. The beautiful, and terrible thing about economics is that economics are all theories.

Answer 3

Marginal utility declines. That is the key point here ---

It really depends what the numbers look like quant-wise. Since these goods are likely compliments, the consumer should likewise purchase them together. Further, the marginal utility of the two together likely continues positive returns longer than either product in isolation.

Answer 4

Economist refer to the satisfaction gained from consuming one ''extra''unit of good, as ''marginal utility'.
The total utility is the combined satisfaction when all the units of goods are consumed together.

Your statement above means that the consumer in question, gains more satisfaction spending on extra cookies , than he is satisfied spending on extra unit of milk over a given time period.

In real life, the consumer feeds himself on substitutes or complements of other food during the day, so it is sensible that he will get fewer satisfaction from milk & cookies taken later.

If he wishes to increase his total utilty, he should probably reduce his consumption, on other close substitutes to milk & cookies.He should spend less or definitely cut out on the following goods eg; coffee,tea, dessert pastries etc..
It is possible he runs out of milk quickly, bcoz he is using milk in tea or coffee, or to compliment his dessert as well. Until she cuts these items in her grocery shopping, he is more willing to get higher total utilitity on evry extra dollar for milk & cookies!

Answer 5

Find a way to make the milk last longer, purchase more cookies and less milk to have an increase.