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5 Cards in this Set

  • Front
  • Back
Law of Diminishing Marginal Utility
The principle that as a consumer increases the consumption of a good or service, the marginal utility obtained from each additional unit of the good or service decreases.
Utility
The satisfaction or pleasure a consumer obtains from the consumption of a good or service.
3 Characteristics of Utility
1. "Utility" and "usefulness" are not synonymous.

2. Utility is subjective.

3. Utility is difficult to quantify.
Total Utility
The total amount of satisfaction derived from the consumption of a single product or a combination of products.
Marginal Utility
The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed.