Answer to Question #76501 in Microeconomics for Jason

Question

A concerned father wants to stop his young son smoking cigarettes. He decides to make his son smoke five full packets at once to convince him to stop.

1. Explain how the law of diminishing marginal utility will support the father’s plan and that his plan may actually work.
2. In your answer, explain all assumptions that you make and why they are important.
3. Do these assumptions apply to only the father’s plan or to the law of diminishing marginal utility in every situation?

Answer 1

1. The law of diminishing marginal utility means, that every additional cigarette will have lower marginal utility, so the father’s plan may actually work, if marginal utility of 5 full packets is negative.
2. The important assumptions are that cigarettes have positive utility for son and that son is not addictive to consumption of cigarettes.
3. These assumptions apply not only to the father’s plan, but to the law of diminishing marginal utility in every situation.