Exercises: The law of diminishing marginal utility

Diego keeps track of the satisfaction he gets from eating basket tacos, measured in «utils»:

Tacos	Total utility (utils)
0	0
1	10
2	18
3	24
4	28
5	30

1. a) Compute the marginal utility of each taco, from the first to the fifth, and show it in a table.
2. b) Does the law of diminishing marginal utility hold? Back up your answer with your results.

On a hot day, Mariana drinks glasses of jamaica water and records her total utility:

Glasses	Total utility (utils)
0	0
1	14
2	26
3	34
4	38
5	38
6	35

1. a) Compute the marginal utility of each glass.
2. b) At which glass is the marginal utility zero? And starting from which one does it turn negative?
3. c) Explain in your own words what it means that total utility falls even though Mariana keeps drinking.

Fill in the following table, which shows the total utility and marginal utility a consumer gets from buying elotes at the fair:

Elotes	Total utility (utils)	Marginal utility (utils)
1	12	12
2	?	9
3	27	?
4	?	3
5	31	?

Copy the table with the four missing values and point out from which elote the law of diminishing marginal utility shows up.

The first bottle of water after working out is worth a lot to almost anyone; the fourth one, much less.

1. a) Explain this fact using the concept of marginal utility.
2. b) Connect it to willingness to pay: why would a rational consumer gladly pay $\$25$ for the first bottle but not for the fourth?

At a fair, each glass of flavored water costs $\$18$. Mariana values each glass in pesos, according to the satisfaction it gives her (her marginal utility measured in pesos):

Glass	Marginal utility
1	$\$30$
2	$\$24$
3	$\$20$
4	$\$16$
5	$\$12$

1. a) How many glasses should she buy if she wants the highest possible net satisfaction? Justify your answer by comparing the marginal utility of each glass with its price.
2. b) Compute the total net gain of that decision: the difference between what she values the glasses she buys and what she pays for them.