Answer to Question #130636 in Microeconomics for rami

Question

Laura consumes 5 beef burger and 7 plate of fries. At this bundle, Laura’s marginal utility of consuming one more beef burger is 10, while her marginal utility of consuming one more plate of fries is 5. What happens when he increases either one unit of beef burger or plate of fries?

(Assume that both good prices are 1)

Answer 1

Solution

Marginal utility can be described as the additional satisfaction obtained from additional consumption of a commodity. In this case scenario, beef burger has a positive marginal utility since additional consumption of beef increases the total utility as evidenced by the marginal utility of 10 which is above the utility that Laura gets by consuming 5 beef burger. However, the plate of fries has a negative marginal utility which implies that additional consumption of the plate of fries leads to a decline in the total utility as described by the utility of 5 which is below the utility of 7 which she gets by consuming an additional plate of fries. Ideally, this implies that Laura obtains more satisfaction by consuming one additional unit of beef burger but is less satisfied by consuming an additional plate of fries. Thus, instead of consuming and additional plate of fries, Laura should consider consuming an additional unit of beef burger as it derives more positive utility and makes her more satisfied.