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5 Cards in this Set
- Front
- Back
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Law of Diminishing Marginal Utility
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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.
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Utility
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The satisfaction or pleasure a consumer obtains from the consumption of a good or service.
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3 Characteristics of Utility
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1. "Utility" and "usefulness" are not synonymous.
2. Utility is subjective. 3. Utility is difficult to quantify. |
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Total Utility
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The total amount of satisfaction derived from the consumption of a single product or a combination of products.
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Marginal Utility
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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.
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