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

Fezzes is perfectly competitive, The  fez is the typical Arabic hat in the ...

The  fez is the typical Arabic hat in the shape of a short red cylinder. Historians believe it was manufactured in the city of Fes, in Morocco, during the 17 th century. It has be

Trade cycle-schumpeter description, Schumpeter Description According to...

Schumpeter Description According to Schumpeter, a cycle represents wave like deviations in business activity from the equilibrium or trend line. There are equilibrium points an

The governed economy, THE GOVERNED ECONOMY The governed economy contai...

THE GOVERNED ECONOMY The governed economy contains central authorities often simply called "the government" - who levy taxes on firms and households and which engages in numer

Determinants of consumption function, Other Determinants 1.          R...

Other Determinants 1.          Rate of Interest Is contained in the argument of the classified economists who argued that rational consumers will save more and consume les

Cost of production and efficiency in long-run equilibrium, What are the con...

What are the conclusions about the cost of production and efficiency in the long-run equilibrium of a perfectly competitive industry? Three conclusions regarding the cost of pr

Describe MRPL and profit maximisation, Q. Describe MRPL and profit maximisa...

Q. Describe MRPL and profit maximisation? The common rule is that firm maximises profit by producing that quantity of output where marginal revenue equals marginal costs. Profi

Keynesian view on unemployment, KEYNESIAN VIEW ON UNEMPLOYMENT   Keynes...

KEYNESIAN VIEW ON UNEMPLOYMENT   Keynes  in his General Theory presented  a view  that  fluctuations in  aggregate demand (AD) influences the equilibrium level of output. Thus

Mixed strategy, Ingrid and Jeff would like to use Saturday night together b...

Ingrid and Jeff would like to use Saturday night together but have dissimilar tastes in entertainment. Jeff would like to go to the opera but Ingrid would prefer to see soccer. As

#title.total revenue, if Q=120-2p is the equation for demand curve, find th...

if Q=120-2p is the equation for demand curve, find the compounding total, marginal and average revenue function

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