Catherine is having dinner at the Yellow Restaurant. She wants desert after eating her entree. She is trying to decide between a cookie or a slice of pie. The cost of a cookie is $5 and the cost of a slice of pie is $8.

1. Compute the marginal utility for cookie and slice of pie
2. Compute the marginal utility per dollar
3. What is the utility maximizing choice for a cookie and slice of pie?
4. Explain what the utility maximizing choice means.
5. Discuss how you could use marginal utility to make consumer choices

Refer to the Marginal Utility Spreadsheet

Marginal Utility Cookie

Quantity Consumed Total Utility Marginal Utility Utility Per

1 18 18

2 34

3 49

4 61

5 71

6 79

7 84

8 87

Marginal Utility: Slice of Pie

Quantity Consumed Total Utility Marginal Utility Utility Per

1 16 16

2 30

3 42

4 51

5 60

6 68

7 74

8 76