marginal utility

Law of diminishing marginal utility

As consumption of a good or service increases, the marginal utility obtained from each additional unit of a good or service decreases

A

Jermaine spends his money on cucumbers and lettuce. If the price of cucumbers falls, then typically Jermaine will substitute ______ for ______. A. cucumbers; lettuce B. lettuce; cucumbers

C

The first Pepsi gives Jack 18 units of utility. The second Pepsi has a marginal utility of X units and the marginal utility of the third Pepsi is 8 units. Jack's total utility from three Pepsis is 38 units. X = ? A. 8 B. 10 C. 12 D. 14 E. 38

D

Total utility is obtained by: A. [Marginal utility of last unit] x [total units consumed] B. [Marginal utility of first unit] x [total units consumed] C. [Marginal utility of median unit] x [total units consumed] D. Sum of marginal utility of each unit consumed

C

You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table above. If your income is $9 and the prices of X and Y are $2/unit and $1/unit, respectively, what quantities of each will you purchase to maximize utility? A. X - 3; Y - 3 B. X - 4; Y - 1 C. X - 2; Y - 5 D. X - 1; Y - 6

Util

is one unit of satisfaction or pleasure

Marginal utility

is the extra satisfaction from an additional unit of the good

Utility

is the satisfaction one gets from consuming a good or service - Not the same as usefulness - Subjective - Difficult to quantify

Total utility

is the total amount of satisfaction

totally utility

is the total amount of satisfaction