Question
In: Economics
What is total utility? What is marginal utility? Give examples of how to calculate total utility...
What is total utility?
What is marginal utility?
Give examples of how to calculate total utility and marginal utility.
What’s the law of diminishing marginal utility?
Give an example of using the formula MUx/Px = MUy/Py.
Solutions
Expert Solution
1.If we talk in simple terms then total utility is the sum of all the marginal utility that is derived by the consumers for consuming any good or service
It is generally expressed in utils
Utils is generally called satisfaction that is derived by consuming any good or service
Total utility is generally considered under the rational choice theory and law of diminishing marginal utility
2
Marginal utility in simple terms is the additional utility that is derived by consuming one extra additional unit of good or service
marginal utility is calculated is the ratio of change utility divided to change in quantity consumed
4.
Law of diminishing marginal utility in simple terms can be said for any person who consumes any goods or service then the satisfaction derived decreases as the consumption rises
it is applicable for normal goods
it is also called that marginal utility of a good or service decline as its supply increases
3.
Rahul Sunny answered 1 year agoRelated Solutions
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