Theory Of Consumer Behaviour: Marginal Utility And Indifference Curve Analysis

Question 1

UTILITY

Answer 1

Utility refers to the want- satisfying power of a commodity.

Question 2

TOTAL UTILITY

Answer 2

Total utility refers to the total satisfaction derived by the consumer from the consumption of a given quantity of a commodity.

Question 3

MARGINAL UTILITY

Answer 3

Marginal utility refers to the additional utility derived from the consumption of an additional unit of a commodity.

Question 4

What is the difference between total utility curve and marginal utility curve?

Answer 4

Total utility curve is concave from above, while marginal utility curve is negatively sloped.

Question 5

What is the difference between total utility and marginal utility?

Answer 5

When total utility increases, marginal utility is positive; when total utility is maximum, marginal utility is zero, and when total utility decreases, marginal utility is negative.

Question 6

State the law of marginal utility.

Answer 6

Law of marginal utility states that as the amount consumed of a commodity increases, the utility derived by the consumer from the additional units, i.e., marginal utility goes on decreasing.