Marginal Utility Case Study Solution

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Table 3. Suppose Cost of Petrol in MBBS for 100 Liter RM Value Price (Current Price) = RM 2.20 220 Ringgits Bond Value Price = 4.4 Bonds 440 Bonds Typical Purchaser Quantity (Liter) RM Value Price (RM) Bond Value Price (Bonds) 3 4 5 1 2.20 4.4 1.46 1.10 0.88 10 22.00 44 14.66 11.00 8.80 20 44.00 88 29.33 22.00 17.60 40 88.00 176 58.66 44.00 35.20 60 132.00 264 88.00 66.00 52.80 80 176.00 352 117.33 88.00 70.40 100 220.00 440 146.66 110.00 88.00 200 440.00 880 293.33 220.00 176.00 300 660.00 1320 440.00 330.00 264.00 400 880.00 1760 586.66 440.00 352.00 In MBBS, all government-controlled prices (e.g., government fees, post office fees, hospital fees, railway tickets, and airline tickets) will…show more content…
Utility is the benefit derived by the buyer from a purchase, and beyond a certain point, the buyer loses the benefit of quantity. This is called marginal utility, and it drives the price people are willing to pay for a good or service. For example, the utility of a glass of water to a man dying of thirst in the desert is very high. The marginal utility of the next glass of water is also very high. The same cannot be said of a man with ample access to free water. The same concept applies to the MBBS bond. It is also different because money and MBBS bonds do not satisfy needs directly. They are used to exchange for goods and services that have intrinsic value/utility. However, the MBBS bond has high utility because it can be used for exchange at value. MBBS bonds would be purchased to cover a number of useful purposes, and the utility of bonds can be expressed in savings and speculation. All households and businesses would purchase MBBS bonds for four basic purposes, depending on means and disposition: 1. They would buy bonds to save money on planned necessities and…show more content…
This fee entitles the business to 20,000 bonds at five bonds per Ringgit, provided the business can show that it has collected 10000 bonds. These bonds could be purchased on the open market or from a customer. The second option is much more business oriented, and therefore, the business would collect more bonds and charge a lower cash price to increase its number of customers. These bonds would be surrendered to the MMF in exchange of new bonds without cost. This would eliminate the repeated use of the same bonds by other people or businesses because there would be a record of the issue date. The collection of bonds depends on the registration fee. The more the registration fee, the more the bonds a business can purchase at the rate of 5 bonds per Ringgit. The registration fee would entitle a business to purchase additional bonds for RM 4,000 (i.e. 20,000/500). This in itself is a cash rebate, and the value depends on the open market exchange rate or the official rate, whichever is better. Table 8 shows the sliding scale of benefits because there is no actual cash limit to the registration fee, and it is a very cost-effective way for businesses to purchase 20,000 or more MBBS bonds at the rate 5 per Ringgit throughout the year for a minimum registration of RM 10,000. The

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