Marginal Utility
Marginal utility is the additional utility from consuming one extra unit. The law of diminishing marginal utitlity tells us that as we consume more units of a good our marginal utility will always fall.
Q Total Utility Marginal Utility
0 0 -
1 100 ________
2 140 ________
3 150 ________
4 150 ________
5 145 ________
- In the diagrams above, we can see that at a quantity of 1, 2 and 3 units the total utility is ________ and the marginal utility is ________ .
- At an output of 5 the total utility is ________ and the marginal utility is ________ .
- At an output of 4 the total utility is at its ________ and the marginal utility is ________.
Example: Total and Marginal Utility
Total utility...
A) decreases when marginal utility decreases
B) is negative when marginal utility decreases
C) diminishes as marginal utility decreases
D) is decreasing when marginal utility is negative E) is always lower than marginal utility
D.
When MU is negative (that means you've had way too many milkshakes and you got sick!), then increasing consumption actually leads to less total utility.