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

Commodity-related shortfalls in export earnings, A complementary facility f...

A complementary facility for commodity-related shortfalls in export earnings This is the most recent proposal of the Group of 77 at UNCTAD in June 1979.  There they requested

Income elasticity of demand, Aside from the price of a product and its subs...

Aside from the price of a product and its substitutes, another significant element of demand for a product is consumer's income. As noticed previously, relationship between demand

Define the pragmatic managerial economics, Pragmatic Managerial economics ...

Pragmatic Managerial economics  Managerial economics is pragmatic. In pure micro-economic theory, analysis is performed, based on certain exceptions, which are far from reality

Consumer pays for peanut butter, Peanut butter monopolist Calvé supplies pe...

Peanut butter monopolist Calvé supplies peanut butter to Albert Heijn in an isolated village. The supermarket is a monopolist in the village. Demand for peanut butter is given by:

Emergence of managerial economics, The emergence of managerial economics as...

The emergence of managerial economics as a separate course of management studies can be attributed to at least three factors: 1.      Growing complexity of business designs maki

Consumer equilibrium, Consumer Equilibrium To demonstrate the consumer...

Consumer Equilibrium To demonstrate the consumer's equilibrium i.e. the point at which the consumer maximizes utility with a given budget, we need to combine the indifference

Proportional tax, PROPORTIONAL TAX Is where whatever the size of incom...

PROPORTIONAL TAX Is where whatever the size of income, the same rate or same percentage is charged.  Examples are commodity taxes like customs, excise duties and sales tax.

Accomplish the desired outcome, Suppose that the present level of income in...

Suppose that the present level of income in the economy is $700 billion. It is determined that in order to decrease the unemployment rate to the desired level, it will be essential

When is production profitable according to price-taking firm, When is produ...

When is production profitable according to price-taking firm at profit, break-even or loss? Production profitable at profit, break-even or loss: a. When TR > TC, in that cas

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