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Maximized utility fill-in

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Maximized utility fill-in

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economics
utility
microeceonomics
 Âge recommandé: 17 ans
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Créé par

Shaner Adams
Shaner Adams
United States

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Maximized utility fill-inVersion en ligne

Maximized utility fill-in

par Shaner Adams
1

What is diminishing marginal utility ?

This is a microeconomic concept that tells us the benefit ( ) gained by consuming more of a good or service with each unit . So if Jenny eats 1 cheeseburger , she might gain 100 utils ( units of ) , eating a second cheeseburger might be worth 50 utils to her , a third worth 10 , and a fourth worth 1 util . While her utility increases with each cheeseburger consumed ( 100 , 150 , 160 , then 161 ) , the utility ( additional benefit ) decreases with each cheeseburger consumed .

How does marginal utility impact consumer behavior ?

Marginal Utility per Dollar is a calculation of a value to ratio for the consumption of an additional unit of a product . The formula is Marginal Utility divided by Price ( / ) . Using the cheeseburger example above , if each cheese burger costs $5 , the Marginal utility per dollar for the second cheeseburger would be 10 utils per dollar ( / ) .

Utility Maximization occurs when a consumer adjusts their spending to their total utility within their given limitations . Utility maximization occurs when the marginal utility per dollar for all the goods you purchase are ( / = / ) .

When the marginal utility per dollar for [ multiple ] goods is not equal , a consumer would increase total utility by consuming less of the item with a marginal utility per dollar and more of the item with a marginal utility per dollar . In other words , the consumer should buy more of the item giving her a deal and less of the item giving her a deal .

* * Note : you could see questions exactly like this where total benefit or marginal benefit are used instead of total utility or marginal utility . Since and utility are essentially synonyms , you will answer the question exact same way .

This method of utility maximization is very similar to profit maximizing combinations and cost minimizing combinations of . Producers just calculate the marginal per dollar or marginal product per dollar for resources instead .

https : / / www . reviewecon . com / consumer - behavior - 2

 
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