Author Question: Explain how it is possible for marginal utility to fall while total utility is still on the rise? ... (Read 89 times)

Wadzanai · **on:** Jun 29, 2018

Explain how it is possible for marginal utility to fall while total utility is still on the rise?

What will be an ideal response?

Question 2

Ron's Hamburger Joint is the only restaurant in town. The above figure represents Ron's cost, demand, and marginal revenue curves. Ron operates as a single-price monopoly.

a) How many hamburgers does Ron produce?
b) What price does Ron charge for a hamburger?
c) What is Ron's total revenue?
d) What is his total cost?
e) What is Ron's economic profit?

popopong · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Total utility is the sum of the marginal utilities of all previous units. Even if marginalutility is falling as long as it is still positive that will allow total utility to continue torise.

Answer to Question 2

a) Ron produces 20 hamburgers per hour.
b) The price is 6 for a hamburger.
c) Ron's total revenue is 120 an hour.
d) Ron's total cost is 80 an hour.
e) Ron's economic profit is 40 an hour.