5 Questions
What does negative marginal utility imply?
Every additional unit consumed causes more harm than good
In the context of cardinal utility, what does the law of diminishing marginal utility postulate?
The first units of consumption yield more satisfaction than subsequent units
What does positive marginal utility indicate?
Every additional unit consumed increases overall utility
When does the satisfaction level start to decrease while consuming a good or service?
After the third or fourth unit
What does the term 'marginal utility' describe in economics?
Change in utility of one unit of a good or service
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.
Test your understanding of marginal utility in economics with this quiz. Explore the concept of how the satisfaction derived from consuming additional units of a good or service changes. Evaluate your knowledge of positive, negative, and zero marginal utility through practical examples.
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