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

Why do monopolies exist, Why Do Monopolies Exist? Monopolists have mark...

Why Do Monopolies Exist? Monopolists have market power and as a consequence will charges higher prices and generate less output than a competitive industry. It produces profit

Practical importance of knowledge-price elasticity of demand, Practical Imp...

Practical Importance of the knowledge of Price Elasticity of demand The practical importance of the measures of elasticity of demand is to be appreciated in various ways:

Substitution effect on law of demand, Substitution Effect on law of demand ...

Substitution Effect on law of demand When price of a commodity falls it becomes comparatively cheaper if price of all other related goods, particularly of substitutes, remain c

What kind of price discrimination, Imagine an amusement park with a sole at...

Imagine an amusement park with a sole attraction: a roller coaster. For simplicity, the cost of providing a ride is zero. There is a single consumer with demand for rides on the ro

Manaerial economics, define scarcityand oppurtunity cost.show how these con...

define scarcityand oppurtunity cost.show how these concepts are useful in managerial decision making

ELASTICITY OF DEMAND, THE COMPANY WOULD TO INCREASE THE PRICE OF STEEL IT...

THE COMPANY WOULD TO INCREASE THE PRICE OF STEEL IT SELLS BY 6% THE MANAGEMENT FORECAST ED THAT INCOME WILL RISE BY 4% NEXT YEAR AND THAT PRICE OF ALUMINIUM WILL FALL BY 2%. IF THE

What is the arc price elasticity of demand, 1.  Joe is evaluating the marke...

1.  Joe is evaluating the marketing strategy at his restaurant and inn. Suppose that in response to a $2.00 off sales promotion for spaghetti dinners, Joe finds that nightly dinner

Iso-quants and iso-cost curve, Explain how a product would reach equilibriu...

Explain how a product would reach equilibrium position with the help  of -iso-quants and iso-cost curve.

Underlying stock price, Financial engineering deals with the design of new ...

Financial engineering deals with the design of new assets. Draw the payoff (at t=1) of the following bull butterfly spread:     Purchase 1 call with exercise price a   Sell 2 ca

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