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25 September, 11:25

Suppose you plan on eating 50 potato chips. As you start consuming potato chips, your marginal utility is very high, but it begins to fall slowly until you've eaten 10 chips. After you have eaten 10 chips, your marginal utility decreases even faster with each additional chip. Marginal utility continues to decline until you've eaten 49 chips. The fiftieth chip does not give you any additional utility. After 50 chips, your mouth gets so salty that it is unpleasant to eat any more, so marginal utility is actually negative for those chips. How many chips should you eat in order to maximize your total utility?

a. 1

b. 10

c. 49

d. 51

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Answers (1)
  1. 25 September, 11:37
    0
    correct option is c. 49

    Explanation:

    given data

    plan eating = 50 potato chips

    begins eaten = 10 chips

    Marginal utility continues eaten = 49 chips

    to find out

    How many chips should you eat in order to maximize your total utility

    solution

    we can say that here consumer will consume only 49 chips to maximize utility because till 49th chip utility is increasing but at a decreasing rate

    and 50th chip provides no additional utility

    so utility is maximize at 49 chips

    correct option is c. 49
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