Transcript jeopardy unit 5

Unit 5 – Marginal Utility
JEOPARDY
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 Which is greater: your total
utility from two slices of
pizza or from four slices of
pizza? Why?
 Which is greater: your
marginal utility of the
second slice of pizza or your
marginal utility of the fourth
slice? Why?
 Define Marginal Utility
 Define Total Utility
 Define Consumer
Surplus. How is it
calculated?
 “Marginal” means
difference between
averages. T/F
 What is the relationship
between MU and TU?
 When price is LOW/HIGH
and demand is
ELASTIC/INELASTIC
consumers have the
greatest surplus.
 Write down the Optimal
Purchasing rule. Explain
what it means.
 What is price
discrimination? Describe
3 categories where
companies can
discriminate on price
 Homer and Barney subsist solely on the consumption of two
good: coffee and donuts. The price of coffee is $5 each and the
price of donuts is $2 each. The marginal utility Homer received
from the last coffee he consumed is 15 and his marginal utility
from the last donut is 6. Barney's marginal utility from the last
coffee is 2 and his marginal utility from the last donut is 8.
 Which consumer is not maximizing his utility? Why?

Quantity
Price willing to pay
Actual Price
Marginal Consumer Surplus

1st unit
$10
$6
$

2nd unit
9
6
$

3rd unit
8

4th unit
7

5th unit
6

6
$
6
$
6
Total consumer surplus =
$
 Calculate total consumer
surplus
If two people consume
the same amount of a
good, their total utility
is also equal. T/F?
 Complete the chart
Quantity
Total Utility (TU)
1
20
2
35
Marginal Utility (MU)
3
10
4
8
5
58
6
60
7
0
8
-5
 Why are demand curves for
most goods downward
sloping? Explain the
relationship between MU
and demand.
Suppose the price of Legos is $5 per set and
the price of a squirt gun is $8 per gun.
Compute the marginal-utility-to-price (MU/P)
 .
ratios
for Legos and squirt guns and enter
these values in the table
How many sets of Legos and how
many squirt guns will Jacob
purchase if he has $26 to
spend?
Sketch a graph of her demand
curve.
-
Suppose the price of the dolls
in the previous question is $8,
how much surplus does Chloe get?
If the dolls are free what
is the consumer surplus?
The ideal market situation.
Name it and does it still
exist?
True or false. It is
very important to
differentiate
products in a
monopoly situation.
Explain
 In this market type, product
differentiation is the key in
increasing profits since firms
can enter and exit the market
relatively easily.
Few large firms
controlling the market.
What problems (2) could
arise as a result?
 Define the difference
between Competitive and
Non-Competitive markets.