Use the following table to answer the question below. Number of Units Total Utility1 1002 1903 2704 3405 4006 450 The addition of which unit has the greatest marginal utility?Multiple Choicesixthfirstfifthsecond
Question
Use the following table to answer the question below. Number of Units Total Utility1 1002 1903 2704 3405 4006 450 The addition of which unit has the greatest marginal utility?Multiple Choicesixthfirstfifthsecond
Solution
To find out which unit has the greatest marginal utility, we need to calculate the difference in total utility from one unit to the next.
Marginal utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service.
Here's how to calculate it:
- The marginal utility from the first to the second unit is 190 - 100 = 90.
- The marginal utility from the second to the third unit is 270 - 190 = 80.
- The marginal utility from the third to the fourth unit is 340 - 270 = 70.
- The marginal utility from the fourth to the fifth unit is 400 - 340 = 60.
- The marginal utility from the fifth to the sixth unit is 450 - 400 = 50.
From these calculations, we can see that the addition of the second unit has the greatest marginal utility. So, the answer is "second".
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