BUS 1103 Learning Journal Unit 4 PDF

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BUS 1103 Learning Journal Unit 4BUS 1103 Learning Journal Unit 4...

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Mohammad Alhamed Alduihi – Group : 0016

University of the People BUS 1103 Microeconomics - AY2022-T1 Learning Journal Unit 4 Instructor: Matthew Deyoung

Mohammad Alhamed Alduihi – Group : 0016

Catherine is having dinner at the Yellow Restaurant. She wants desert after eating her entree. She is trying to decide between a cookie or a slice of pie. The cost of a cookie is $5 and the cost of a slice of pie is $8. Refer to the Unit 4 Learning Journal Marginal Utility spreadsheet

1.

Compute the marginal utility for cookie and slice of pie

Formula = CTU2 – CTU1/ Q2 –Q1 For Cookie. a) 1 piece of cookie’s Marginal Utility = 18. b) 2 pieces = 34-18 / 2-1 = 16 c) 3 pieces = 49 – 34 /3-2 = 15 d) 4 pieces = 61 -49 / 4-3 = 18 e) 5 pieces = 71 – 61 / 5-4 = 10 f) 6 pieces = 79 -71 / 6-5 = 8 g) 7 pieces = 84 – 79 / 7-6 = 5 h) 8 pieces = 87 – 84 / 8-7 = 3 For Slice of Pie a) 1 piece of cookie’s Marginal Utility = 16 b) 2 pieces = 30 – 16 / 2-1 = 14 c) 3 pieces = 42 – 30 / 3-2 = 12 d) 4 pieces = 51 – 42 / 4-3 = 9 e) 5 pieces = 60 – 51 / 5-4 = 9 f) 6 pieces = 68 – 60 / 6-5 = 8 g) 7 pieces = 74 – 68 / 7-6 = 6 h) 8 pieces = 76 – 74 / 8-7 = 2

2. Compute the marginal utility per dollar Per Dollar of a Cookie. a) For 1 piece = 18/5 = 3.6 = 4 b) 2 pieces = 16/ 5 = 3.2 = 3

Mohammad Alhamed Alduihi – Group : 0016

c) 3 pieces = 15/5 = 3 d) 4 pieces = 18/5 = 3.6 = 4 e) 5 pieces = 10/5 = 2 f) 6 pieces = 8/5 = 1.6 = 2 g) 7 pieces = 5/5 = 1 h) 8 pieces = 3/5 = 0.6 = 1 Per Dollar of a slice of Pie a. 1 piece = 16/8 = 2 b. 2 pieces = 14/8 = 1.75 = 2 c. 3 pieces = 12/8 = 1.5 = 2 d. 4 pieces = 9/8 = 1.125 = 1 e. 5 pieces = 9/8 = 1.125 = 1 f. 6 pieces = 8/8 = 1 g. 7 pieces = 6/8 = 0.75 = 1 h. 8 pieces = 2/8 = 0.25 = 2

3. What is the utility maximizing choice for a cookie and slice of pie? The utility maximization option for a cookie is 18/5 which is 3.6 and for a slice of pie it is 16/8 which is 2. 4. Explain what the utility maximizing choice means. Utility maximization refers to the concept that individuals and firms seek the highest level of satisfaction with their economic decisions. (Pettinger, n.d.), which is the greatest amount of satisfaction that can be obtained from consuming a good entirely. 5. Discuss how you could use marginal utility to make consumer choices

Mohammad Alhamed Alduihi – Group : 0016

In fact, Marginal Utility makes a decision about what to buy, how much I will cost, the cost of choosing to give up the quantity of the good and how it will affect the choice of other good that the consumer may consider. If Catherine decides to choose a cookie over a piece of pie, at what cost and how much compared to the quantity of the other product? A reasonable frugalist would pay twice that amount for something only if, in marginal comparison, it conferred the item twice the utility. (Greenlaw, S.A & Shapiro, D. (2018). References. 1. Pettinger,

T. (n.d.). Utility maximisation. Economics Help. https://www.economicshelp.org/blog/glossary/utility-maximisation/#:%7E:text=Utility %20maximisation%20refers%20to%20the,that%20give%20the%20most%20satisfaction.

2. Greenlaw, S. A. & Shapiro, D. (2018). Principles of microeconomics, 2e. Chapter 6 Open https://d3bxy9euw4e147.cloudfront.net/oscmsStax Rice University. prodcms/media/documents/Microeconomics2e-OP.pdf...