Marginal utility, Managerial Economics

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.

Posted Date: 11/27/2012 5:10:28 AM | Location : United States

Related Discussions:- Marginal utility, Assignment Help, Ask Question on Marginal utility, Get Answer, Expert's Help, Marginal utility Discussions

Write discussion on Marginal utility
Your posts are moderated
Related Questions
iwant presentation on united postal services on social cost and benefits

Perfectly Elastic Supply Supply is said to be perfectly or infinitely elastic if the price is fixed at all levels of demand.  The demand curve has been shown in the above diag

elasticity concepts occupies a central place in policy formulation explain in details

CAPITAL ACCOUNT This records all transactions arising from capital movements into and out of the country.  There are a variety of such capital flows recorded, namely: i.

What are the tools of factor markets and the distribution of income? Tools of factor markets and the distribution of income: a. Factor distribution of income b. Marginal

A hypothetical AD-AS model for Canada During the 1990s, many stock market investors in Canada became optimistic about information technology and bid up stock prices, more t

“Managerial economics involves use of economic analysis to make business decisions involving the best use of a firm’s scarce resources” Explain the statement with suitable example.

For Oliver E. Williamson, existence of firms derives from 'asset specificity' in production, where assets are specific to each other such that their value is much less in a second-

COSTS OF UNEMPLOMENT AND INFLATION   In  an  economy  both  unemployment  and  inflation  have  adverse effects  and policy makers  formulate policy instruments to contain both

Analyse The Method By Which a Firm Can Allocate The Given Advertising Budget Between Different Media Of Advertisement