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Marginal utility
- It is the measure of the additional satisfaction obtained from consuming one additional unit of good.
* Marginal Utility: An instance
- The marginal utility can be derived from increasing from 0 to 1 units of food may be 9
- Increasing from 1 to 2 may be 7
- Increasing from 2 to 3 may be 5
* Observation: Marginal utility is getting diminished
* Diminishing Marginal Utility
- The principle of the diminishing marginal utility states that as more a good is used, using additional amounts will yield smaller additions to utility.
Relationship between Total and Marginal Utility
* Diminishing Marginal Utility: An Example
Explain how diminishing returns differ from diminishing returns to scale. The answer should clearly distinguish among SR (one or more factors are fixed) and LR (where all facto
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Demonstrate mathematically that the equilibrium condition MRS PB PA is the equivalent of the utility-maximizing rule MU AP A MU B PB .
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