Alex is consuming candy bars that cost $1 each. When he purchases the 5th5th candy bar his total utility increases from 6 utils to 8 utils. What is the marginal utility of the 5th5th candy bar?Multiple choice question.1 util2 utils14 utils8 utils
Question
Alex is consuming candy bars that cost $1 each. When he purchases the 5th5th candy bar his total utility increases from 6 utils to 8 utils. What is the marginal utility of the 5th5th candy bar?Multiple choice question.1 util2 utils14 utils8 utils
Solution
The marginal utility is calculated by the change in total utility divided by the change in the quantity of the good consumed. In this case, Alex's total utility increased from 6 utils to 8 utils when he consumed the 5th candy bar.
So, the change in total utility is 8 utils - 6 utils = 2 utils.
Since the change in quantity is just 1 candy bar (from the 4th to the 5th), the marginal utility of the 5th candy bar is 2 utils/1 candy bar = 2 utils.
So, the answer is 2 utils.
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