Qualification > Commerce

Economics P3 Questions/Doubts

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Dasith:

--- Quote from: Azland on November 20, 2011, 10:43:34 am ---Yes, Answer is A. I got your point so the table listing consumption has no significance?

--- End quote ---

yea u cud say dat ..

Tohru Kyo Sohma:
Hello everyone
I didn't come here for long.
i started practicing economics P3 and its really hard
i'll just post my doubts!
please try helping me out someone:D
oct/nov 2002:- Qns 2,3,5,6,7,9,11,12,14,18 and 27
oct/nov 2003:- Qns 1,2,4,5,7,8,9,10,11,12,15,16,17,19,20,21,24,27,28 and 30
oct/nov 2004:- Qns 1,5,6,8,9,10,12,24,25,27,28,29 an 30
PLEASE HELP ME OUT:'(

Azland:
long list :(. Would be helpfull if you could copy paste the questions here.

Tohru Kyo Sohma:
The table shows the marginal utility that a consumer obtains from consuming successive units of
good X.
             Quantity of units                 MU of units
                    1                                       10
                    2                                       18
                    3                                       24
                    4                                       28
                    5                                       30
                    6                                       31
The price of good X is $4.
What additional information is needed to determine the quantity of X that the consumer will
purchase?
A the consumer’s income elasticity of demand for good X
B the consumer’s price elasticity of demand for good X
C the marginal utility of money to the consumer
D the marginal utility that the consumer obtains from substitute goods
price output
i said A but the answer is C
can anyone explain why?

Azland:
Equi-marginal principle Mux = Px

Marginal utility of good X = Price of good X.

In words a consumer will continue to purchase a good untill the utility he gains from the last purchase is equal to or higher than his value of money. Note..the marginal utility of money is assumed constant for this assumption..it does not reduce with more or lesser purchases of any good.

Your question shows the marginal utility he gets from each good and so the only information left is the value of money(Px). Elasticity has pretty much nothing to do with these type of questions so you can cross of a,b,d completly.

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