Question

Question:

Some commodities consumed by certain households can be psychologically or physically habit-forming, so that the more a person consumes of them, the more strongly one desires to consume additional quantities.

1)Describe the behavior of the marginal utilities of such products.

2)Does this explain why many people choose not to smoke, but those who do usually consume ten or more cigarettes per day?

Answer 1

Answer 1 - In the case of the normal goods , the utility decreases as one consumes more and more of the commodity. In those goods the marginal utility keeps on decreasing.

But when a goods becomes a physical or a psychological need, in those goods the utility keeps on increasing with the increasing consumption. These commodities make us habitual of their consumption and hence the MU curve in these goods is UPWARD SLOPING or in other words it increases with the consumption of more quantity of the concerned good.

2 - Because these regular habits and continuous increase MU makes us addicted to such goods which may harm us , this is the reason why many people dont smoke.

Those who smoke more than 10 cigarettes have gone through the phase of the increasing MU and now they have become addicted .