Question

Suppose you are taking a luxury tour of a city in a limousine. With just a few passengers, the tour is pleasant and everyone has plenty of space to stretch and move around to see the sights. As more people get in the limo, it may start to become crowded. Suppose the 5th and 6th individuals enter the limousine together. What is your marginal utility (x) associated with this increase of passengers

Answer 1

Answer:

Answer is explained in the explanation section below.

Explanation:

Note: This question is incomplete and lacks necessary data about the number of passengers and total utilities. However, I have found a similar question on the internet and will using its data to solve for this problem. Besides that, I have attached the data in the attachment that I am using in this question.

Solution:

First of all, we are asked to calculate the marginal utility. In order to do that, we need to know the formula for Marginal Utility.

Formula:

Marginal Utility = TU2 - TU1/C2-C1

Where,

MU = Marginal Utility

TU = Total Utility

C = Number of units

So, according to the data provided.

For 0 number of passengers:

MU(0) = 0

For 2 number of passengers:

MU(2) = (100 - 0)/(2-0) = 100/2 = 50

Similarly,

For 4 number of passengers:

MU(4)=(225-100)/(4-2)= (125/2) = 62.5  

For 6 number of passengers:

MU(6)=(355-225)/(6-4) = (130/2) = 65

For 8 number of passengers:

MU(8)=(400-355)/(8-6) = (45/2) = 22.5

For 10 number of passengers:

MU(10)=(425-400)/(10-8)= (25/2) = 12.5