What are some practical things you could do to raise

Reference no: EM133710961

Law of Diminishing Marginal Utility

One of the main principles behind mainstream, neoclassical economic theory, is that individuals act to maximize their utility. Utility is generally defined as a satisfaction (pleasure) that an individual derives from consuming or using a specific good or service. Total utility indicates the total amount of satisfaction or pleasure an individual derives from consuming some specific quantity of a good or service. Marginal utility refers to the additional satisfaction a consumer gets from an additional unit of a good or service she/he consumes during a given period of time.

The law of diminishing marginal utility states that as an individual consumes more units of a specific good or service, the additional utility the consumer derives from the successive units diminishes over time. Thus diminishing marginal utility explains a lot about consumer behavior in the market economy.

Does the law of diminishing marginal utility hold for all goods and services we buy and consume? What are the exceptions?

As a manager, what are some practical things you could do to raise marginal product per employee that also benefit the firm? In your answer use a company you currently work for or one you worked for in the past.

Give specific examples and discuss how diminishing marginal productivity affect marginal revenues and profits of firms.

Reference no: EM133710961

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