Answered: How to compute Marginal Utility.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

How to compute Marginal Utility.

Expert Solution

Step 1

Utility refers to the total amount of satisfaction derived from the consumption of a good or service. This definition is derived from the concept of usefulness. The understanding of utility is important to maximize the utility derived from the consumption of a good, a rational consumer will always aim at getting the maximum utility. There are two concepts of utility:

1. Cardinal utility analysis holds that utility derived from the good can be measured in economic units named utils.

2. Ordinal utility analysis holds that utility cannot be measured but consumers can choose the goods on the basis of preference.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions