Question

f a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is Select one: a. 25 utility units. b. 20 utility units. c. 5 utility units. d. unknown as more information is needed to determine the answer. Previous page

Answer 1

Answer:

correct option is c. 5 utility units

Explanation:

given data

receives 20 units = consuming 2 candy

receives 25 units = consuming 3 candy

to find out

Marginal utility

solution

we know that Marginal utility of 3rd candy bar is express as  

Marginal utility = $\frac{change in total utility}{change in quantity}$    .........1

put here value

Marginal utility = $\frac{25 - 20}{3 - 2}$

Marginal utility =  5 unit

so correct option is c. 5 utility units