Household reaction on spending
The following table gives a hypothetical total utility schedule for the Cookie Monster (CM):
Number of cookies Total Utility
0 0
1 100
2 200
3 275
4 325
5 350
6 360
7 360
Calculate the CM's Marginal utility schedule. Draw a graph of total and marginal utility. If the cookies cost the CM 5 cents each, what is the maximum number of cookies he would most likely eat?
How would each of the following events effect a household reaction on spending:
A) The price of unleaded gasoline rises to over $4.00 per gallon
B) Tuition at your college is cut 25 percent.
C) You receive an award that pays you $300 per month for the next five years?
D) Interest rates rise dramatically and savings accounts are now paying 10% interest annually.
E) The price of food doubles ( It you are on a meal plan assume that your board charges double).
F) A new business opens up nearby offering part-time jobs at $20 per hour.