Question

From the following total utility schedule

Qx 0 1 2 3 4 5 6 7
TUx 0 6 16 22 26 29 29 27

a. Derive the marginal utility schedule.
b. Plot the total and the marginal utility schedules.
c. Determine where the law of diminishing marginal utility begins to operate.
d. Find the saturation point.

Answer 1

Qx 0 1 2 3 4 5 6 7

TUx 0 6 16 22 26 29 29 27

MUx - 6 10 6 4 3 0 -2

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

b. The total utility curve is upward-sloping curve, and the marginal utility increases first till Qx =2 and then decreases and becomes negative at Qx =7.

c. The law of diminishing marginal utility begins to operate at Qx = 3.

d. The saturation point is at Qx = 6, at this point MUx = 0 and TUx starts to decrease.