Economics Marginal Utility Questions Medium
Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one additional unit of a good or service. It is the change in total utility resulting from the consumption of an additional unit of a good. Marginal utility is based on the principle of diminishing marginal utility, which states that as a consumer consumes more and more units of a good, the additional satisfaction or benefit derived from each additional unit decreases. This concept is crucial in understanding consumer behavior and decision-making, as it helps explain why consumers are willing to pay different prices for different goods and why they allocate their resources in a certain way.