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 Choicefifthsecondfirstsixth
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 Choicefifthsecondfirstsixth
Solution
To answer this question, we need to calculate the marginal utility of each additional unit. Marginal utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service. It can be calculated by subtracting the total utility of the previous unit from the total utility of the current unit.
Here's how we calculate:
- The marginal utility of the second unit is 190 (total utility of the second unit) - 100 (total utility of the first unit) = 90.
- The marginal utility of the third unit is 270 - 190 = 80.
- The marginal utility of the fourth unit is 340 - 270 = 70.
- The marginal utility of the fifth unit is 400 - 340 = 60.
- The marginal utility of 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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