Concept of Margin Flashcards
1
Q
What is marginal utility
A
The additional utility or satisfaction gained from each additional unit of consumption
2
Q
What happens after each consumption
A
Marginal Utility usually decreases after each additional increase in consumption. Demonstrating Law of diminishing marginal utility.
3
Q
What happens when utility falls
A
When utility falls the consumers will consume more however they place a lower value on the next unit
4
Q
What does the lower price show
A
Lower price reflects the lower utility
5
Q
A
