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What is marginal utility and explain with example? |
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Answer» Marginal utility refers to additional utility obtained from the consumption of an additional unit of a commodity. To illustrate, if 10th unit yields satisfaction of 100 utils, while 11th unit yields satisfaction of 105 utils, then marginal utility derived from the 11 th unit is 5 utils. Marginal utility theory\xa0examines the increase in satisfaction consumers gain from consuming an extra unit of a good. The utility\xa0is an idea that people get a certain level of satisfaction/happiness/utility\xa0from consuming goods and service.\xa0In economics,\xa0utility\xa0is the satisfaction or benefit derived by consuming a product; thus the\xa0marginal utility of a good\xa0or service is the change in the\xa0utility\xa0from an increase in the consumption of that\xa0good\xa0or service. |
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