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Utility and price elasticity of demand are important concepts in explaining consumer behavior. (a) Define marginal utility. (b) The table below shows the quantities, prices,
Utility and price elasticity of demand are important concepts in explaining consumer behavior. (a) Define marginal utility. (b) The table below shows the quantities, prices, and marginal utilities of two goods, fudge and coffee, which Melissa purchases. Melissa spends all her money and buys only these two goods. In order to maximize her utility, should Melissa purchase more fudge and less coffee, purchase more coffee and less fudge, or maintain her current consumption? Explain. (c) Assume that consumers always buy 20 units of good Q each month regardless of its price. (i) What is the numerical value of the price elasticity of demand for good Q? (ii) If the government implements a per-unit tax of $2 on good Q, how much of the tax will the seller pay
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