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Tutorial 3

1 . Are there any services or goods where customers do not experience diminishing minor utility? Explain? (4 marks) 2 . The table listed below shows the amount and total utility obtained from consumption of good X. Fill in the blanks for limited utility. (4 marks)

Quantity| Total Utility| Marginal Electricity

1| 40|

2| 75|

3| 105|

4| 130|

5| 150|

(b) If cost per device of X is RM25, calculate the quantity of X which will maximise the utility with this consumer? (4 marks) 3. How do you specify utility? Precisely what are the techniques in analyzing utility? (4 marks) 5. Based on the concept of cardinal theory explain how consumer can achieve equilibrium? (6 marks) your five. Which gamble would you become more likely to acknowledge, a 70: 40 possibility of gaining or losing ВЈ10 000, or a 40: 62 chance of attaining or dropping ВЈ1? Clarify why. (4 marks)

six. Distinguish between limited consumer excess and client surplus? (4marks)

7. Why do you think it may be difficult to calculate exactly what persons would shell out to buy a particular good, and estimate the utility by consumption of it? (10 marks)

Case Study

Rachel is a scholar attending a university, and she takes a meal during her lunch time. Assume that she gets three choice of where to take in: The University Refectory, a nearby club or a close by restaurant. Apart from the price your woman takes in to account the standard of food, as well as the pleasantness with the surrounding the girl chose to consume. Now based upon this information, drawing her indifference map intended for the two features. Now make your own assumptions, on spots, price, budget, characteristics, and draw a weekly productivity frontier, and mark her optimum degree of consumption. Now illustrate the next a. A greater in the cost of the regional pub, although no difference in the price of foods at the additional two places b. A shift in Rachel's style towards foodstuff quality in accordance with pleasantness c. The refectory is now furbished and now a...

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