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
THE LAW OF DIMINISHING RETURNS  (LAW OF VARIABLE PROPORTIONS) One of the most important and fundamental principles involved in economics called the law of diminishing return

who are the contributors in economics and what they contribute in economics

You have been provided with daily data starting in January 2009 on the main New Zealand stock market index, the NSX-50. Choose a suitable model for measuring volatility on the New

The Budget line and its economic interpretation The indifference curve shows us consumer preferences but it does not show us the situation in the market place.  Here the consu

Real economies are delineated as those which are associated with a reduction in the physical quantity of inputs like raw materials, varying kinds of labour and various kinds of cap

The following represents the section headers you should consider for your reasoned document.   Each section should have (at least) two research citations to support your work :

Decrease in Demand At the initial equilibrium price P 1 , quantity demanded falls from q 1 to q d .  But the quantity supplied is still q 1 at this price.  Hence, this

DIRECT TAXES A direct tax is one where the impact and incidence of the Tax is on the same person e.g. Income Tax, death or estate duty, corporation taxes and capital gains

Cheap Labour   It is often argued that the economy must be protected from imports which are produced with cheap, or 'sweated", labour.  Some people argue that buying foreign

Q. What do you mean by Cost Function? Cost function is a derived function. It's derived from the production function that describes the efficient method of production at any gi