Step 1
Work It Out
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You must read each slide, and complete any questions on the slide, in sequence.
Brenda likes to have bagels and coffee for breakfast. The accompanying table shows Brenda’s total utility from various consumption bundles of bagels and coffee.
| Consumption Bundle | ||
|---|---|---|
| Quantity of Bagels |
Quantity of Coffee (cups) |
Total utility (utils) |
| 0 | 0 | 0 |
| 0 | 2 | 28 |
| 0 | 4 | 40 |
| 1 | 2 | 48 |
| 1 | 3 | 54 |
| 2 | 0 | 28 |
| 2 | 2 | 56 |
| 3 | 1 | 54 |
| 3 | 2 | 62 |
| 4 | 0 | 40 |
| 4 | 2 | 66 |
Table
Suppose Brenda knows she will consume 2 cups of coffee for sure. However, she can choose to consume different quantities of bagels. She can choose either 0, 1, 2, 3, or 4 bagels.
Find Brenda’s total utility and calculate her marginal utility from bagels as she goes from consuming 0 bagel to 1 bagel, from 1 bagel to 2 bagels, from 2 bagels to 3 bagels, and from 3 bagels to 4 bagels. Assume she consumes two cups of coffee.
| Quantity of Bagels | Quantity of Coffee (cups) | Total utility (utils) | Marginal utility (utils) |
|---|---|---|---|
| 0 | 2 | --- | |
| 1 | 2 | ||
| 2 | 2 | ||
| 3 | 2 | ||
| 4 | 2 |
Table
First find total utility from the table above when Brenda consumes two cups of coffee for each bagel she consumes. Marginal utility is calculated as the change in total utility going from 0 to 1 bagel, 1 to 2 bagels, 2 to 3 bagels, and 3 to 4 bagels. If Brenda does not consume any bagels she will have a total utility of 28 of utils. After consuming her first bagel, total utility will increase to 48 utils, Marginal utility is calculated as the difference in total utility. Brenda has a marginal utility of 20 utis (48 – 28) when she consumes the first bagel. Her total utility increases to 56 utils as she consumes her second bagel which provides her with a marginal utility of 8 utils (56 – 48). Her total utility increases to 62 and 66 when she consumes 3 and 4 bagels, respectively. Brenda has a marginal utility of 6 utils (62 – 56) and 4 utils (66 - 62) for 3rd and 4th bagels, respectively. For review see section “Utility and Consumption.”
Find Brenda’s total utility and calculate her marginal utility from bagels as she goes from consuming 0 bagel to 1 bagel, from 1 bagel to 2 bagels, from 2 bagels to 3 bagels, and from 3 bagels to 4 bagels. Assume she consumes two cups of coffee.
First find total utility from the table above when Brenda consumes two cups of coffee for each bagel she consumes. Marginal utility is calculated as the change in total utility going from 0 to 1 bagel, 1 to 2 bagels, 2 to 3 bagels, and 3 to 4 bagels. If Brenda does not consume any bagels she will have a total utility of 28 of utils. After consuming her first bagel, total utility will increase to 48 utils, Marginal utility is calculated as the difference in total utility. Brenda has a marginal utility of 20 utis (48 – 28) when she consumes the first bagel. Her total utility increases to 56 utils as she consumes her second bagel which provides her with a marginal utility of 8 utils (56 – 48). Her total utility increases to 62 and 66 when she consumes 3 and 4 bagels, respectively. Brenda has a marginal utility of 6 utils (62 – 56) and 4 utils (66 - 62) for 3rd and 4th bagels, respectively. For review see section “Utility and Consumption.”
Find Brenda’s total utility and calculate her marginal utility from bagels as she goes from consuming 0 bagel to 1 bagel, from 1 bagel to 2 bagels, from 2 bagels to 3 bagels, and from 3 bagels to 4 bagels. Assume she consumes two cups of coffee.
