marginal utility Flashcards
1
Q
marginal utility definition
A
the additional utility gained from consuming an additional unit
2
Q
relationship between total utility and marginal utility
A
total utility continues to rise as marginal utility decreases, up until its highest value when marginal utility is at zero. after that marginal utility turns negative (disutility) and total utility stats to decrease
3
Q
how does diminishing marginal utility explain the downward sloping demand curve
A
to consume one more, marginal utility falls and this is reflected in low prices causing high demand. the more we consume, the less value we place on the good/service which is reflected in low price.
