Question

The following table displays the total utility U(X) that corresponds to the number of units of X consumed by three different consumers (Auon, Barbara, and Camira), holding everything else constant: Auon Barbara Camira

Compute the marginal utility of X for each of the three consumers at each level of X.

-Based on the data in the table, can you tell whether any of these consumers are violating any of the standard assumptions about preferences?

-Is it possible that any of these three consumers have the same preferences, and that columns for the three consumers differ only because of the arbitrary units that are used to measure utility? Explain.

Auon		Barbara		Camira
U(X)	X	U(X)	X	U(X)	X
10	2	10	2	10	2
14	3	10	3	12	3
16	4	10	4	15	4
17	5	9	5	19	5
17.5	6	8	6	24	6

Answer 1

X	MU(A)	MU(B)	MU(C)
2	10	10	10
3	4	0	2
4	2	0	3
5	1	-1	4
6	0.5	-2	5

Both B and C are violating standard preferences. B is violating the assumption of monotonicity, i.e. more is better as his MU is either constant or negative.

C is violating the assumption of diminishing marginal utility.

No, these numbers are not representing the same preferences as B's MU is constant or negative while A and C have positive MU. C is addicted to the good while A consumes it normally