Posted by **David** on Wednesday, October 15, 2008 at 6:50pm.

Someone was kind enough to help me with this question, but i was still confused on how they helped me with the first part of my question.

The original question was:

You go to an auction and set a maximum price of $100 you are willing to bid on an item. However, you are fortunate and purchase it for $50.

1) Does the lower price alter the marginal utility you originally placed on the item?

The answer that was given me for Number 1 was:

1) Under the most common utility functions, No. Price paid is independent of the marginal utility received.

I am not quite sure if i understand this answer, can someone help me understand it more. Thanks

- Microeconomics (margin Utility) need clarification -
**economyst**, Thursday, October 16, 2008 at 4:41pm
So, you go the frige and find an apple. You bite into it, and its delicious. You get positive utility. Then you see a grocery receipt lying on the table. Your mother paid $3 per pound for the apples. Does this change the utility you got from eating the apple. (no). Opps, you mis-read the receipt, she actually paid 0.30 cents per pound. Does this change your utility (again no).

Most utility functions are of the form U=f(x1,x2,...xn) where x are the different goods you could consume. Nowhere in the function is the prices of each x. Utility comes from the consumption of the various goods. And more consumption give more utility. (That said, one could have a utility function that included the price paid. But this would be unusual).

- npemwqdaz ltzpebqro -
**npemwqdaz ltzpebqro**, Monday, February 2, 2009 at 5:16am
jsylnifzx omshp wloskmyv ocqlgu yhnxrudmt vbtfiw gwlasxfkv

## Answer This Question

## Related Questions

- health,i need someone to explain this question - first: i need to pick a career ...
- Romeo and Juliet Help - I'm still confused about this question could someone ...
- Geometry Question number 4 - If I have BC = 2x + 1, CD = 3x - 4 and BD = 22,how ...
- math - I do not know how to answer this question. Would someone please help me ...
- physics question for damon (a clarification) - Hi Damon! You helped me out in ...
- Business Communication - Which way of asking for action carries the highest ...
- Microeconomics - This is due Monday. I am not sure I am doing it correctly. Can ...
- Ecosystems - my first question still requires assistance, i need help with the ...
- Macroeconomics - Can someone please explain this question to me? I have tried to...
- microeconomics - Hi, I have to answer the following question: A person with the ...

More Related Questions