Started on Monday, 26 August 2024, 10:50 PM
State Finished
Completed on Monday, 26 August 2024, 11:07 PM OSCAR THE TUTOR
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Marks 11.00/11.00 for FAC MAC ECS DSC TAX QMI
Grade 100.00 out of 100.00 FIN INV BNU STA tutorials
Question 1 I confirm
Complete that this assessment will be my own individual work;
Not graded
that I will not communicate with anyone else in any way during the completion of
Flag question this assessment;
that I will not cheat in any way in completing and submitting this assessment.
I confirm.
I do not confirm.
Question 2 If a consumer allocates her income between two goods, x and y, then she will be in
Complete equilibrium when
Mark 1.00 out of
1.00 MUx/Px = MUy/Py and she is below her budget constraint.
Flag question
MUx = MUy and she has spent all of her income.
MUx/Px = MUy/Py and all of her income is spent.
MUx/MUy > Px/Py and all of her income is spent.
A consumer will be in equilibrium when MUx/Px = MUy/Py, and all of her income is
spent.
The ratio of MUx/Px represents the marginal utility per unit of money spent on good
x, while the ratio of MUy/Py represents the marginal utility per unit of money spent on
good y. When these ratios are equal (MUx/Px = MUy/Py), it implies that the
consumer is allocating their income in such a way that the additional satisfaction
gained from the last rand spent on each good is equal.
This allocation strategy ensures that the consumer cannot further increase their
overall satisfaction by reallocating their spending between goods. Any reallocation
of spending from one good to another would lead to a decrease in the marginal
utility per unit of money spent for the goods involved, reducing overall satisfaction.
Additionally, the statement specifies that all of the consumer's income is spent. This
is important because in consumer equilibrium, the consumer has fully utilised their
budget to maximize their satisfaction. If there is any unspent income, it implies that
the consumer is not maximizing their utility and could potentially achieve a higher
level of satisfaction by allocating the remaining income differently.
,Question 3 Given the prices of goods and services, which of the following indicates consumer
Complete equilibrium?
Mark 1.00 out of
1.00 The consumer spends his or her income in such a way that he or she attains
Flag question the lowest possible total utility.
The consumer spends his or her income in such a way that the weighted
marginal utility (marginal utility per rand) is at its lowest.
The consumer spends his or her income in such a way that the weighted
marginal utility (marginal utility per rand) is the same for the goods.
The consumer spends his or her income in such a way that he or she attains
the highest possible marginal utility.
The consumer spends his or her income in such a way that the weighted marginal
utility (marginal utility per rand) is the same for the goods.
Consumer equilibrium refers to a situation where a consumer maximizes their
satisfaction or utility given their limited income and the prices of goods and services.
In this context, the concept of marginal utility is crucial. Marginal utility is the
additional satisfaction or utility a consumer derives from consuming one more unit of
a good or service.
To achieve consumer equilibrium, the consumer allocates their income to maximise
overall satisfaction. The consumer evaluates the marginal utility of each good or
service relative to its price. In other words, the consumer considers the "bang for
the buck" or the utility gained per unit of money spent on each good.
Question 4 If Zurika's marginal utility for a loaf of bread is 10 and for 500g of cheese is 30, her
Complete
Mark 1.00 out of total utility could be increased by buying more bread and less cheese.
1.00
total utility would be maximised if the price of 500g cheese is triple the price of
Flag question
a loaf of bread.
total utility could be increased by buying more cheese and less bread.
total utility would be maximised if the price of 500g cheese is one-third the
price of a loaf of bread.
Zurika is in equilibrium when the weighted marginal utilities are the same for both
goods.
Let us assume the price of bread is R1, the price of 500g cheese must be R3 (or
triple the price of bread) for Zurika to be in equilibrium.
,Question 5 Which of the following examples illustrates the law of diminishing marginal utility?
Complete
Mark 1.00 out of A mother loves all her children equally.
1.00
The more Will Smith movies I watch, the more I like them.
Flag question
After I had drunk a Coca-Cola, I bought another, but it was not as good as
the first.
I do not eat bananas, as they make me nauseous.
The law of diminishing marginal utility states that as a person consumes more units of
a particular good or service, the additional satisfaction or utility they derive from
each additional unit will tend to decrease.
In the given example, the person initially consumed Coca-Cola and enjoyed it,
which indicates a positive marginal utility. However, when they purchased and
consumed another Coca-Cola, they found that it was not as good as the first one.
This suggests that the additional utility or satisfaction they derived from the second
Coca-Cola was less than the first. The decreasing level of satisfaction from each
additional unit consumed is in line with the law of diminishing marginal utility.
Question 6
Based on the following information on the marginal utility and price of ice cream,
Complete chocolate, cool drink and bread:
Mark 1.00 out of
1.00
The marginal utility of chocolate is 72 and the price is R3.
Flag question The marginal utility of ice cream is 100 and the price of ice cream is R5.
The marginal utility of cool drink is 120 and the price is R10.
The marginal utility of bread is 60 and the price is R12. 5
Which one has the highest weighted marginal utility
cold drink
ice cream
bread
chocolate
, The weighted marginal utility of a product is the marginal utility of the product
divided by the price of the product, that is
We have to find the product with the highest weighted marginal utility:
· The weighted marginal utility of a chocolate is
· The weighted marginal utility of an ice cream is
· The weighted marginal utility of a cold drink is
· The weighted marginal utility of bread is
Thus, chocolate has the highest weighted marginal utility.
Question 7
This question is based on the following table showing Koleka’s consumption of
Complete chocolate ice cream.
Mark 1.00 out of
1.00 Number of 0 1 2 3 4 5 6 7
servings
Flag question
Total utility 0 10 25 35 60 60 35 25
What is the marginal utility Koleka derives from the fifth serving she eats?
Answer: 0
Question 8
This question is based on the following table showing Koleka’s consumption of
Complete chocolate ice cream.
Mark 1.00 out of
1.00
Number of 0 1 2 3 4 5 6 7
servings
Flag question
Total utility 0 10 25 35 60 60 35 25
Koleka’s marginal utility becomes negative when she eats ____ biltong sticks.
Answer: 6
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