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Author Question: Suppose that Hannah spends 3 to buy five biscuits. The marginal utility of the fifth biscuit is ... (Read 59 times)

michelleunicorn

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on: Jul 1, 2018
Suppose that Hannah spends 3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at 0.60; total utility of the five biscuits is valued at 4.20 . Given this information, what do we know about consumer surplus?
 a. It is impossible to determine consumer surplus without knowing the marginal utility of the first four biscuits.
  b. It is impossible to determine consumer surplus without knowing the price per biscuit.
  c. It is impossible to determine consumer surplus without knowing the price Hannah was willing to pay for the first five biscuits.
  d. Consumer surplus is equal to 2.40.
  e. Consumer surplus is equal to 1.20.

Question 2

What happens to consumer surplus as price falls along a given demand curve?
 a. It always increases.
  b. It always decreases.
  c. It never changes.
  d. It increases only if price increases just a little.
  e. It depends on the elasticity of demand and supply.


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ergserg

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Reply #1 on: Jul 1, 2018
Answer to Question 1

E

Answer to Question 2

A


michelleunicorn

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Reply #2 on: Jul 1, 2018
Thank you :)


ergserg

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Reply #3 on: Jul 1, 2018
Happy to help you


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