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Household reaction on spending

The following table gives a hypothetical total utility schedule for the Cookie Monster (CM):

Number of cookies Total Utility

0 0

1 100

2 200

3 275

4 325

5 350

6 360

7 360

find out the CM's Marginal utility schedule. Draw a graph of total and marginal utility. If the cookies cost the CM 5 cents each, what is the maximum number of cookies he would most likely eat?

How would each of the following events effect a household reaction on spending:

A) The price of unleaded gasoline rises to over $4.00 per gallon

B) Tuition at your college is cut 25 percent.

C) You receive an award that pays you $300 per month for the next five years?

D) Interest rates rise dramatically and savings accounts are now paying 10% interest annually.

E) The price of food doubles ( It you are on a meal plan assume that your board charges double).

F) A new business opens up nearby offering part-time jobs at $20 per hour.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M928068

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