Marginal utility, Managerial Economics

Assignment Help:

Marginal Utility

The extra utility derived from the consumption of one more unit of a good, the consumption of all other goods remaining unchanged.

The hypothesis of diminishing marginal utility

This states that as the quantity of a good consumed by an individual increases, the marginal utility of the good will eventually decrease.

  Units of                                   Total Utility/                                       Marginal Utility/

X consumed                             mm TU (utils)                                       MU (utils)

          0                                   0                                                         0

          1                                   15                                                        15

          2                                   25                                                        10

          3                                   33                                                         8

          4                                   38                                                         5

          5                                    40                                                        2

          6                                    40                                                        0

          7                                     39                                                       -1

Consuming 1 unit of X gives 15 utils of satisfaction, consuming 2 units gives 25 utils, and so on.  The figure of marginal utility decline as each successive unit is consumed.  If the consumer goes on consuming more and more units, eventually he reaches a point (the sixth unit) where additional units yields no extra satisfaction at all.


Related Discussions:- Marginal utility

Illustrate about forecasting in management, Illustrate about forecasting in...

Illustrate about forecasting in management A forecast expert has been asked to provide quarterly estimates of the sales volume for a specific product for the next four quarters

Prices of other goods must remain constant - law of demand, Prices of other...

Prices of other goods must remain constant Changes in the prices of other goods frequently impinge on the demand for a particular commodity. If prices of commodities for which

Explain the law of diminishing marginal returns, 1. Define 'Arc Elasticity'...

1. Define 'Arc Elasticity'. 2. Explain the law of 'Diminishing marginal returns'. 3. What is 'Prisoner's Dilemma', of non cooperative game? 4. What is 'Third degree Discrimation'?

Williamson - wachter and harris model, Williamson, Wachter and Harris (1975...

Williamson, Wachter and Harris (1975) suggest promotion incentives within the firm as a substitute to morale-damaging monitoring, where promotion is based on objectively measurable

Disguised unemployment, Disguised unemployment Situation where some pe...

Disguised unemployment Situation where some people are employed apparently, but if they are withdrawn form this job, total production remains the same. In most developing coun

Domestic workers to domestic firms, Labor demand for low-skilled workers in...

Labor demand for low-skilled workers in the United States is w= 24 -0.1E where E is the number of workers (in millions) and w is the hourly wage. There are 120 million domestic U.S

Determine the perfectly competitive firms profit, 1. Suppose in a perfectly...

1. Suppose in a perfectly competitive industry the market demand and supply forces combine to produce a short-run equilibrium price of Rs 70. Suppose that a firm in this industry h

Concepts of elasticities in making decisions, Question 1: "Anyone who i...

Question 1: "Anyone who is willing to learn the language of economics and take the time to practice making decisions can learn to be an effective manager." Explain how. Qu

Example on changes in fixed costs and profit maximisation, Q. Example on Ch...

Q. Example on Changes in fixed costs and profit maximisation? What if arena owner in the illustration above triples the fee for the subsequent concert but all other factors are

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd