Understanding Marginal Analysis: Consumer Choices in Economics
School
Monroe Township High School**We aren't endorsed by this school
Course
HISTORY 10
Subject
Economics
Date
Dec 10, 2024
Pages
2
Uploaded by ProfessorWhale2930
AP Micro Topic 1.6 Marginal Analysis & Consumer ChoicePart 1 - Check for Understanding-Read the article excerpt and use your understanding of rational decision making and marginal utility to explain why each of the statements below are inaccurate. “Joey Chestnut won his 10th title in Nathan's Famous Hot Dog Eating Contest, eating a record 72 hotdogs in 10 minutes. That's his new personal best, beating his 2016 record of 70. Chestnut may have consumed a total of about 20,000 calories” [www.aol.com]1.“This guy must love hot dogs. Clearly the law of diminishing marginal utility doesn’t apply to him” 2.“Whenever hot dogs are free, people eat as many as they possibly can.” Part 2 - Utility Practice- The tables below show Clifford’s total utility from consuming different amounts of hot dogs and nachos. The price of a hot dog is $2 and the price of an order of nachos is $3. Fill in the blanks in the chart then answer the questions below. Hot Dogs (Price = $2) Nachos (Price = $3) Quantity Total Utility Marginal Utility Marginal Utility Per Dollar Quantity Total Utility Marginal Utility Marginal Utility Per Dollar 0 0 0 0 1st 12 1st 24 2nd 20 2nd 42 3rd 26 3rd 54 4th 30 4th 63 5th 32 5th 69 3.Does Clifford’s marginal utility increase, decrease, or stay the same as he consumes more hot dogs? 4.What is Clifford’s marginal utility from consuming the 3rd order of nachos? 5.What would Clifford’s total utility be from consuming 2 hot dogs and 3 orders of nachos? 6.If Clifford decides to spend a total of $18, how many hot dogs and how many orders of nachos would maximize his total utility? 7.How much total utility does Clifford get at the optimal combination you identified in question 6? Video Help- https://goo.gl/UHzUykDo not post online© Copyright Jacob Clifford, ACDC Leadership, 2019Even though his marginal utility for hotdogs is higher, doesn’t mean that he isn’t losing marginal utility.Even over time people will stop eating because they don’t get any pleasure from it, no matter how much you eat.0gi10121964decrease12744nachosand3hotdogs8)
AP Micro Topic 1.6 Marginal Analysis & Consumer ChoicePart 3 - More Practice- The tables below show Avery’s total utility from purchasing different amounts of toy horses and pickles. Fill in the blanks in the chart then answer the questions below. Toy Horses (Price = $3) Pickles (Price = $4) Quantity Total Utility Marginal Utility Marginal Utility Per Dollar Quantity Total Utility Marginal Utility Marginal Utility Per Dollar 0 0 0 0 1st 18 1st 28 2nd 33 2nd 48 3rd 42 3rd 64 4th 48 4th 76 5th 51 5th 84 8.What would Avery’s total utility be from purchasing 3 toy horses and 2 pickles? 9.If Avery has a budget of $25, how many toy horses and how many pickles should she purchase to maximize her total utility? 10. Assume Avery’s budget decreased to only $14, how many toy horses and how many pickles should she purchase to maximize her total utility? 11. Assume Avery now has a budget of $11 but the price of pickles fell to $2. What combination of toy horses and pickles would maximize Avery’s total utility? 12. If the price of toy horses falls from $3 to $2, will Avery’s demand curve for toy horses increase, decrease, or stay the same? Explain. Part 4 - Stretch Your Thinking- Answer the question. 13. Assume that your friend suggests that he found an exception to the law of diminishing marginal utility. He argues that the law doesn’t apply to hobbies like collecting comic books or baseball cards because people that collect these items get more utility from owning more of them. Explain why your friend is incorrect by using an example that shows how the law still applies to these hobbies.Video Help- https://goo.gl/UHzUykDo not post online© Copyright Jacob Clifford, ACDC Leadership, 2019Overtime, people will be looking for rarer and rarer items, leading to less items in general being gained, leading to a diminishing marginal utility.Oisse⊥g29)O3Horsesand4pickles2ofeach2ofeachStaythesamebecausethepricedroplosscanberegainedbytheQuantitydemand