(a) Complete the above utility schedule (b) Draw the marginal utility curve C(i) At what quantity does TU equal MU? (II) What is the value of MU when TU reaches the maximum? (iii) What happens to the values of TU as the quantity consumed increases? (iv) What happens to the values of MU as the quantity consumed increases?
Explanation
Quantity of goods consumed
Total utility
Marginal Utility
0
0
0
1
10
10
2
16
(6)c
3
(20)a
4
4
(22)b
(2)d
5
23
1
6
23
(0)e
a= 16 + 4 = 20; b= 23 - 1 =22; C= 16 - 10 =6; d= 22 -20 = 2: e = 23 - 23 = 0 (b) (c)(i) Tu = mu at 1 unit and 0 unit (ii) Tu reaches maximum at 1 (iii) The value of Tu increases up to a point and begins to decline. (iv) Mu's value will diminish.
