Question

Suppose that if Kathy consumes one more bottle of soda her total utility will increase by 50 utils. However, to purchase this one additional bottle of soda she will have to give up consuming three cheeseburgers which currently contribute 75 utils to her total utility. If she chooses to consume one more bottle of soda, she will obtain a __________.

Answer 1

Kathy will obtain a utility loss of 25 utils.

Step-by-step explanation:

The consumption of one more bottle of soda will cause the total utility to increase by

= 50 utils

However, in order to purchase an additional bottle of soda Kathy will need to sacrifice the consumption of three cheeseburgers.

The utility loss from giving up three cheeseburgers

= 75 utils

If Kathy consumes one more unit of soda her total utility will change by

= 50 - 75

= -25

So she will have a loss in total utility by 25 utils.