Answer to Question #237400 in Macroeconomics for tej

Question

From the TUx (total utility of X) schedule in the following Table derive the MUx (Marginal utility of X) schedule, and (b) plot the TUx and the Mux. Identify the saturation point. 

Qx Tux

0 0

1 100

2 185

3 260

4 325

5 385

6 435

7 480

8 520

9 500

10 480

Answer 1

Qx 0 1 2 3 4 5 6 7 8 9 10

TUx 0 100 185 260 325 385 435 480 520 500 480

MUx -100 85 75 65 60 50 45 40 -20 -20

a. The marginal utility schedule is calculated as tabulated above using the formula $MUx =\frac{\Delta TUx}{\Delta Qx}$ .

The total utility curve is upward-sloping curve, and the marginal utility decreases first till Qx =7 and becomes negative at Qx =8.

The saturation point is at Qx = 8, at this point MUx = 0 and TUx starts to decrease.