Economics!!! Help!!!?

Question

Can someone please help me with this questions.

1. This week you have gone to 2 parties. Assume the total utility you gained from these parties is 100 utils. Then you go to a third party, and your total utility rises to 110 utils. What is the marginal utility of the third party attended per week? Given the law of diminishing marginal utility, what will happen to total utility and marginal utility when you go to a fourth party this week?

2. Suppose your marginal utility for meals at the campus cafeteria this week has fallen to zero. Explain what has happened to your total utility curve derived from consuming these meals. Now explain what will happen to total utility if you eat more meals at the cafeteria this week.?

Please someone help, thanks a lot.

Answer 1

1. Marginal Utility of party 3 is 10 utils. It's the increase of the total due to the last party 110-100. Diminishing M.U. means your MU will continue to fall (4th party should be less than 10) and total Utility will increase but at a decreasing rate. I assume you stop going to parties once MU is 0, so total utility isn't likely to reach a point that the total starts decreasing. Hmmm, unless your friends drag you.

2. Your total utility has reached it's maximum, consuming more would be negative utility. (Like it makes you sick to think of cafeteria food anymore.) Thus you have a curve that is flat, consuming this is zero utility. Horizontal. But it is the tangent line at the peak of your curve, highest point.

Answer 2

Don't overthink the questions - they're pretty straight-forward.

1. Marginal utility of the third party is only 10 utils (10 more than the 100 you already had). But the first two parties gave you an average of 50 each. By the time you get to the third party, you're hardly getting any additional benefit by going. The law of diminishing returns would indicate that going to a fourth party is going to give you something less than 10 utils, if any at all. In other words, by the time you get to the fourth party, you might as well have just stayed at the 2nd or 3rd party - it just gets to be a drag bopping around.

2. When you're really hungry, any food is good. So your utility curve goes up when you eat at the cafeteria. But after a couple of meals there, your utility peaks. After a couple more, it hits zero, and if you eat there any more, you're going to puke (negative utility).