Suppose you plan on eating 50 potato chips. As you start consuming potato chips, your marginal utility is very high, but it begins to fall slowly until you’ve eaten 10 chips. After you have eaten 10 chips, your marginal utility decreases even faster with each additional chip. Marginal utility continues to decline until you’ve eaten 49 chips. The fiftieth chip does not give you any additional utility. After 50 chips, your mouth gets so salty that it is unpleasant to eat any more, so marginal utility is actually negative for those chips. How many chips should you eat in order to maximize your total utility?
a. 1
b. 10
c. 49
d. 51
Answer: c. 49
You might also like to view...
Higher saving rates mean higher future growth rates because
A) the banks have more money to distribute to their shareholders. B) saving contributes to more investment, which yields a larger capital stock. C) the interest earned from savings gives you more wealth. D) saving contributes to less investment, which yields a larger capital stock.
In the above figure, the line represented by the "4" is the
A) average fixed cost. B) marginal revenue. C) average total cost. D) marginal cost.
Unemployment that results from the seasonal pattern of work in specific industries is
A) frictional unemployment. B) structural unemployment. C) cyclical unemployment. D) seasonal unemployment.
Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital stock is
A) constant. B) growing at a rate of gA. C) growing at a rate of gN. D) growing at a rate of gA + gN. E) none of the above