Definitions

Question 1

What is the Definition of marginal Utility?

1.
2.
3.
4.

Answer 1

• =Grenznutzen
• added satisfaction that a consumer gets from having one more unit of a good or service
• determines how much of an item consumers are willing to purchase
• can be zero (no change), positive (additional happiness) or negative (consuming actually harmful)
• in an efficient market price = marginal cost

Question 2

What is the Law of diminishing marginal utility?

Answer 2

• the first consumption of a good or service carriers more utility than later units