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Questions and Answers
What does negative marginal utility imply?
What does negative marginal utility imply?
- Every additional unit consumed causes more harm than good (correct)
- Every additional unit consumed brings more satisfaction
- Every additional unit consumed has no impact on overall utility
- Every additional unit consumed increases overall utility
In the context of cardinal utility, what does the law of diminishing marginal utility postulate?
In the context of cardinal utility, what does the law of diminishing marginal utility postulate?
- The utility of a good or service increases with each additional unit consumed
- The last units of consumption yield more satisfaction than initial units
- The satisfaction level remains constant with each additional unit consumed
- The first units of consumption yield more satisfaction than subsequent units (correct)
What does positive marginal utility indicate?
What does positive marginal utility indicate?
- Every additional unit consumed has no impact on overall utility
- Every additional unit consumed causes harm
- Every additional unit consumed brings more satisfaction
- Every additional unit consumed increases overall utility (correct)
When does the satisfaction level start to decrease while consuming a good or service?
When does the satisfaction level start to decrease while consuming a good or service?
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What does the term 'marginal utility' describe in economics?
What does the term 'marginal utility' describe in economics?
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Study Notes
Marginal Utility
- Negative marginal utility implies a decrease in overall satisfaction from consuming another unit of a good or service.
- The law of diminishing marginal utility postulates that the additional utility derived from consuming one more unit of a good or service decreases as the quantity consumed increases.
- Positive marginal utility indicates an increase in overall satisfaction from consuming another unit of a good or service.
- The satisfaction level starts to decrease while consuming a good or service when the marginal utility becomes negative.
- Marginal utility in economics describes the additional satisfaction (utility) derived from consuming one more unit of a good or service.
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