Utility Maximization Rule & How to use it! AP Microeconomics; Study Guide, Practice Test

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Utility Maximization Rule & Formula Example.

QUESTIONS:

1) Let's say that your total utility for product A is as follows... Quantity 1, Total Utility is 50; Quantity 2, Total Utility 70. The cost of product A is $5.

Product B is as follows... Quantity 1, Total Utility is 25; Quantity 2 Total Utility is 50. The cost of product B is $4.

Is this consumer maximizing their utility? Show your work using the utility maximizing rule.

2) What is the "law of diminishing marginal utility"?