David buys pizza from the campus pizzeria. He calculates his total utility from pizza as follows:
Slices of Pizza Total Utility
0 0
1 12
2 17
3 20
4 22
All of the following statements regarding David's utility from pizza are true except
Part 4
A.
David's total utility is increasing at a decreasing rate.
B.
To increase his marginal utility from a slice of pizza, David must consume less.
C.
David experiences diminishing marginal utility.
D.
David experiences increasing marginal utility since his total utility is rising.
D. David experiences increasing marginal utility since his total utility is rising.
This statement is false. Although David's total utility is rising as he consumes more slices of pizza, his marginal utility is actually decreasing. This is evident from the fact that the increase in total utility from consuming additional slices decreases from 12 to 5 to 3 as he goes from 1 slice to 2 slices to 3 slices.
The correct answer is D. David does not experience increasing marginal utility since his total utility is not constantly rising with each additional slice of pizza. The table shows that his total utility increases from 0 to 12 with the first slice, but then increases at a decreasing rate with each additional slice of pizza. This indicates diminishing marginal utility, as stated in option C. Option B is also correct because to increase his marginal utility, David would need to consume less pizza as his total utility is already increasing at a decreasing rate. Option A is also true because the table shows that the increase in total utility is becoming smaller with each added slice of pizza, indicating decreasing marginal utility.
To answer this question, we need to understand the concepts of total utility, marginal utility, and the relationship between these two concepts.
Total utility refers to the overall satisfaction or happiness that a consumer derives from consuming a certain quantity of a good or service. It is the sum of the marginal utilities of each unit consumed.
Marginal utility, on the other hand, represents the additional satisfaction or happiness that a consumer gets from consuming one additional unit of a good or service. It is the change in total utility when one unit is consumed.
Statement A: "David's total utility is increasing at a decreasing rate."
This statement is true. As we look at the total utility column provided, we can see that the total utility is increasing with each additional slice of pizza consumed. However, the increase in total utility with each additional slice is getting smaller. For example, the increase in total utility from 0 to 1 slice is 12, from 1 to 2 is 5, from 2 to 3 is 3, and from 3 to 4 is 2. So, while David's total utility is increasing, it is doing so at a decreasing rate.
Statement B: "To increase his marginal utility from a slice of pizza, David must consume less."
This statement is false. The marginal utility of pizza decreases as David consumes more slices. From the given table, we can see that the marginal utility from the first slice (0 to 1) is 12, from the second slice (1 to 2) is 5, from the third slice (2 to 3) is 3, and from the fourth slice (3 to 4) is 2. So, to increase his marginal utility, David must consume fewer slices, not more.
Statement C: "David experiences diminishing marginal utility."
This statement is true. Diminishing marginal utility refers to the phenomenon where the additional satisfaction derived from consuming each additional unit of a good decreases. In this case, as David consumes more slices of pizza, the marginal utility decreases, as mentioned in the explanation for statement B.
Statement D: "David experiences increasing marginal utility since his total utility is rising."
This statement is false. The fact that David's total utility is increasing does not necessarily imply that his marginal utility is also increasing. As we discussed earlier, the marginal utility is actually decreasing. Therefore, this statement is incorrect.
In summary, all the statements are true except for statement D.