Question

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

Answer 1

Answer:

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