Question

“Italian pasta increasingly made of wheat from Canada and U.S” (Durishin, M. & Robinson, A. Vancouver Sun Newspaper, Tuesday, December 3, 2019, p. B4).

Suppose that Rajdeep loves lasagna. The following table presents a measurement of Rajdeep’s Total Utility, TU of Lasagna for each successive serving.

Servings of Lasagna	Total Utility, TU	Marginal Utility, MU
0	0
1	20
2	50
3	90
4	120
5	140
6	155
7	165
8	170

1. Given the Total Utility in the Utility Schedule presented above, determine the Marginal Utility, MU that Rajdeep attains with EACH successive serving of lasagna eaten.
   
2. Why is it that the Marginal Utility, MU begins to FALL even as the Total Utility rises?
   

What makes the consumer “Budget Line” seem like another version of the Production Possibility Frontier, PPF? And what

Answer 1

Servings	Total utility	Marginal Utility TU1 - TU0
0	0	-
1	20	20
2	50	30
3	90	40
4	120	30
5	140	20
6	155	15
7	165	10
8	170	5

The marginal utility schedule begins to fall because of the Law of Diminishing Marginal Utility. This law states that as consumer keeps on consuming more and more of a good, the additional consumption gives the consumer lesser utility. This is why the marginal utility schedule rises at first but then starts declining with the consumption of every successive unit. This is because the consumer is willing to sacrifice less and less of one commodity in order to consumer more and more of the other commodity.

Budget line looks like a PPF because it also shows the trade off between the commodities. It shows how much of one good the consumer is willing to sacrifice in order to comsume more of the other good, given the resources of the individual.

The difference is that PPF is drawn at the level of the economy and budget line is drawn at the level of the individual.