Construct a diagram for marginal utility and total utility of
ice cream consumed by a person with the help of the given
table.Ice-Creams
Consumed
Marginal Utility
(MU)
Total utility
(TU)
1 20 20
2 16 36
3 10 46
4 4 50
5 0 50
6 -6 44
Answers
Answer:
male the point of view of the
Total utility:
If we consider how an individual experiences utility when consuming ice cream, we can make some important observations how total utility changes as the consumption of a good increases.
Notice that additional scoops provide Axel with more utility up until the 4
th scoop at which point Axel's utility is maximized. Beyond 4 scoops we can see that Axel is actually experiencing less and less total happiness.
Marginal utility:
If we look more closely at Axel's total utility we can observe how it changes as he consumes more ice cream. The change in a consumer's total utility when he consumes one additional unit is the marginal utility.
Notice that Axel's marginal utility decreases as he consumes more ice cream. This is explained by the fact that the second, third and fourth scoops of ice cream were less satisfying to him than the first scoop.
Notice also that beyond 444 scoops his marginal utility is negative, meaning that Axel is actually made worse off by the fifth and sixth scoops of ice cream.
