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Questions and Answers
In the law of diminishing marginal utility, what is the assumption regarding the marginal utility of money?
In the law of diminishing marginal utility, what is the assumption regarding the marginal utility of money?
What type of measurement is assumed for utility in the context of diminishing marginal utility?
What type of measurement is assumed for utility in the context of diminishing marginal utility?
What happens to marginal utility when total utility becomes maximum?
What happens to marginal utility when total utility becomes maximum?
At the point of satiety, which of the following statements is true?
At the point of satiety, which of the following statements is true?
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When marginal utility is falling, what happens to total utility?
When marginal utility is falling, what happens to total utility?
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Study Notes
Law of Diminishing Marginal Utility
- Alfred Marshall assumes the marginal utility of money remains constant when applying the law of diminishing marginal utility.
- The measurement of utility assumed in the law of diminishing marginal utility is ordinal.
- Total utility (TU) is maximized when marginal utility (MU) is zero. This is known as the point of satiety.
- Marginal utility (MU) becomes negative when total utility (TU) is falling.
- Total utility (TU) is rising when marginal utility (MU) is falling.
- Utility is influenced by the intensity of want, income of the consumer, and quality of a product.
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Description
This quiz explores the Law of Diminishing Marginal Utility, detailing its assumptions and implications. Understand how total utility is maximized and the role of marginal utility in consumer behavior. Test your knowledge on key concepts such as point of satiety and the factors influencing utility.
