Question

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is:__________
A) 26 units of utility.
B) 6 units of utility.
C) 8 units of utility.
D) 38 units of utility.

Answer 1

Answer:

C) 8 units of utility.

Explanation:

• Marginal utility refers to the change in the total utility that is achieved from the consumption of one more unit of good.
• It is calculated by getting the change in total utility and dividing it by the change in the number of units consumed.

In this case;

First yields = 18 units

Second yields = 18 + 12 units = 30 Units

Third yields =  38 units

Therefore;

Marginal unit = 38 units - 30 units

                      = 8 units

Therefore, marginal utility is 8 units of utility.