Answer these questions, basing your answers on the text.
1. What is the difference between our basic needs and our additional wants?
2. What two ways are there of describing 'utility'? (see lines 6-7 and lines 9-11)
3. What example is used to show that utility varies from person to person?
4. What example is used to show that it varies from nation to nation?
5. What example is used to show that it varies from time to time?
6. What example is used to show that utility is retated to quantity?
7. What can we say about the way in which utility decreases?
Answer:
1. A basic needs are things that we cant live without. Things that should be completed in order to continuing living such as food and shelter. In the other hand, additional wants are things that people need to complete the basic needs. Every people have different additional wants depend on its utility.
2. Lines 6-7: utility not same with usefulnes as characteris of satisfying in economics.
Lines 9-11: utility determines the relation between a consumer and a commodity.
3. For students, the utility of pencil and notes are very high but very low for repairmans.
4. The utility of rice is higher in Ethiopia than in America, because in Ethiopia gaining rice is difficult.
5. Utility of umbrellas is high when rainy days and is low when summer.
6. Utility of things based on the quantity of that things it self. If the amount of commodity increases, the utility of that commodity decreases and vice versa. For example, good fertilizer is quite difficult to find in rural, but its easily found in big cities. So the utility level of fertilizer in big cities is low rather that in rural because the amount of fertilizer in rural is limited.
7. The utility of something will decrease if someone keep consuming it, or if the stock of the commodity increases.