5 Questions
What is marginal utility?
Marginal utility describes the change in utility of one unit of a good or service.
What does positive marginal utility indicate?
Positive marginal utility indicates that every additional unit consumed increases overall utility.
What does negative marginal utility imply?
Negative marginal utility implies that every additional unit consumed causes more harm than good, leading to a decrease in overall utility.
What does the law of diminishing marginal utility state?
The law of diminishing marginal utility states that the first units of consumption of a good or service yields more satisfaction or utility than the subsequent units, and there is a continuing reduction in satisfaction.
Give an example of positive marginal utility.
When eating pizza, the second piece may bring more satisfaction than the first, indicating positive marginal utility.
Test your understanding of marginal utility with this interactive quiz. Explore scenarios where marginal utility can be positive, negative, or zero and enhance your grasp of this key economic concept.
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