Question

Plot the marginal utility of Andy's candy utility function. Round your answer to two decimal places.

Marginal Utility starts at 12 and decreases as quantity increases.
Marginal Utility starts at 2 and increases as quantity increases.
Marginal Utility remains constant at 8 for all quantities.
Marginal Utility starts at 6 and fluctuates randomly with quantity.

Answer 1

Marginal utility measures the additional satisfaction or benefit a person receives from consuming one more unit of a good or service. For Andy's candy utility function, the marginal utility starts at 12 and decreases as the quantity increases. To plot the marginal utility, create a table or graph showing the quantity of candy consumed and the corresponding marginal utility values.

Step-by-step explanation:

Marginal utility measures the additional satisfaction or benefit that a person receives from consuming one more unit of a good or service. In the case of Andy's candy utility function, the marginal utility starts at 12 and decreases as the quantity increases, indicating diminishing marginal utility. This means that as Andy consumes more candy, the increase in satisfaction per additional unit of candy consumed becomes smaller.

For example, if Andy initially has 1 candy and his marginal utility is 12, when he eats a second candy, the marginal utility decreases to 6. If he eats a third candy, the marginal utility decreases further to 3, and so on.

Therefore, to plot the marginal utility of Andy's candy utility function, you can create a table or graph showing the quantity of candy consumed and the corresponding marginal utility values. The table or graph will start with a marginal utility of 12 and decrease as the quantity increases.