Problem 1

20-1. The campus pizza parlor sells a unity pizza for $12. If you order a abet pizza, however, the pizzeria charges a terms of only $5 for the additional pizza. Explain how an understanding of borderline inferior helps to explain the pizzerias pricing strategy. 20-1-A. The pricing method that the pizzeria is using shows they understand how marginal good works, specifically change magnitude marginal gain. After hitting the take of satisfaction from the first pizza, a second pizza will not be quite as rewarding. getting an additional pizza at a cost of only $5 dollars will entice a customer to get it because of the lower impairment.Because the logical implication of the second pizza is little than the first, a costumer would spend less on it. 20-2. As an individual ravens more units of an item, the person eventually experiences diminishing marginal utility. This means that to increase marginal utility, the person must consume less of an item. Explain the logic of this be havior using the example in Problem 20-1. 20-2-A. As a consumer eats their first few slices of pizza, the level of satisfaction will eventually hit a maximum where they sport thoroughly enjoyed it. After hitting the level of satisfaction, every piece of pizza after that will diminish the pleasure.Therefor, eating less pizza allows the consumer the great enjoyment because no pleasure is being added after eating to the train of satisfaction. 20-3. Where possible, complete the missing cells in the table. 20-3-A. 20-4. From the data in Problem 20-3, if the price of a cheeseburger is $2, the price of a bag of French heat is $1, and you constitute $6 to spend (and you spend all of it), what is the utility-maximizing combination of cheeseburgers and french fries? 20-4-A. The utility-maximizing combination is two cheeseburgers and two orders of french fries. 20-9.Consider the movements that take place from i address to the abutting (A to B to C and so on) along the issue forth util ity persuade below as the individual successively increases intake by one more unit, and answer the questions that follow. a. Which one-unit increase in breathing in from one point to the next along the total utility incline generates the highest marginal utility? From point A to point B thither is a total utility increase of 5 units, content the marginal utility is 5 units as well. Therefor, point A to point B generates the highest marginal utility. b.Which one-unit increase in consumption from one point to the next along the total utility curve generates zero marginal utility? Point E to point F generates no marginal utility, meaning the marginal utility is zero. c. Which one-unit increase in consumption from one point to the next along the total utility curve generates negative marginal utility? Point F to point G decreases total utility from 11 to 10 units meaning marginal utility is negative. 20-10. Draw a marginal utility curve corresponding to the total utility curve dep icted in Problem 20-9. 20-12.Refer to the following table for a contrastive consumer, and assume that each calendar week this consumer buys only sweltry dogs and tickets to baseball enliveneds. The price of a hot dog is $2, and the price of a baseball game is $60. If the consumers income is $128 per week, what quantity of each item will he purchase each week at a consumer optimum? 20-12-A. The consumer will purchase 2 baseball game tickets and 4 hot dogs each week at a consumer optimum. Equal marginal utilities per dollar occur at the consumption level of 2 baseball game tickets and 4 hot dogs, with the total income equaling $128. The marginal utility per dollar spent equals 5.