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Questions and Answers
According to the LDMU, does the utility derived from each successive unit increase as the quantity consumed of a commodity increases?
False
Is the utility you get from consumption of the first orange the same as the second orange, according to the LDMU?
False
Is the LDMU best explained by the MU curve derived from the relationship between TU and total quantity consumed (Q)?
True
According to the LDMU, does the consumption of all other commodities remain constant as the quantity consumed of a commodity increases per unit of time?
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According to the Law of Diminishing Marginal Utility (LDMU), what happens to the utility derived from each successive unit as the quantity consumed of a commodity increases per unit of time?
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Which curve is best explained by the Law of Diminishing Marginal Utility (LDMU) and is derived from the relationship between Total Utility (TU) and total quantity consumed (Q)?
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As per the Law of Diminishing Marginal Utility (LDMU), how does the utility you get from consumption of each successive unit change?
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According to the Law of Diminishing Marginal Utility (LDMU), what happens to the consumption of all other commodities as the quantity consumed of a commodity increases per unit of time?
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Study Notes
Law of Diminishing Marginal Utility (LDMU)
- Utility derived from each successive unit of a commodity decreases as the quantity consumed increases.
- Consumption of the first orange provides more satisfaction than the second orange, illustrating decreasing marginal utility.
- The marginal utility (MU) curve visualizes the relationship between total utility (TU) and total quantity consumed (Q), showing how marginal satisfaction diminishes.
Consumption Dynamics
- Consumption of all other commodities is assumed constant when analyzing the increase in consumption of a single commodity over time.
- As more units of a commodity are consumed, the utility derived from each successive unit declines, reflecting diminishing returns in satisfaction.
Key Characteristics of LDMU
- The LDMU is characterized by a downward-sloping MU curve, which represents the declining additional satisfaction obtained from each unit consumed.
- As quantity consumed increases, the increase in total utility becomes smaller, confirming the principle of diminishing marginal returns.
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Description
Test your understanding of the Law of Diminishing Marginal Utility (LDMU) and its relationship to the marginal utility curve. Explore how the utility derived from successive units of consumption changes as the quantity consumed increases.
