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Economics Homework Four Answers - Student One (view source)
Revision as of 15:30, October 11, 2009
, 15:30, October 11, 2009clarified my feedback
Marginal Utility
Marginal Utility
:Not quite. "Utility" is the OVERALL satisfaction, not "marginal utility." (Minus 1). Marginal utility is only the utility at the "margin" (the additional utility from something on top of overall utility).
:Not quite. "Total utility" is the correct answer, because it is the OVERALL satisfaction, not "marginal utility." (Minus 1). Marginal utility is only the utility at the "margin" (the additional utility from something on top of overall utility).
2.Suppose you see a sleek-looking used sports car and you immediately want to buy it. You think to yourself, "I can paint that car and fix it up so it looks brand new!" You like it so much that you would very work hard for a year and save up $10,000 to buy it. You ask the owner how much he'd sell the car for, and he says $9,000. If you buy it for $9,000, then what is your "consumer surplus"? What does that concept mean?
2.Suppose you see a sleek-looking used sports car and you immediately want to buy it. You think to yourself, "I can paint that car and fix it up so it looks brand new!" You like it so much that you would very work hard for a year and save up $10,000 to buy it. You ask the owner how much he'd sell the car for, and he says $9,000. If you buy it for $9,000, then what is your "consumer surplus"? What does that concept mean?