What is marginal utility? Why is the term "marginal" important in utility analysis?
What will be an ideal response?
Marginal utility is the change in total utility due to a one-unit change in the quantity of a good consumed. Marginal means additional or incremental. "Marginal" is important in utility analysis because an individual contemplating increasing consumption of an item by one additional unit compares the utility gain from that one additional unit consumed per dollar spent with the additional utility per dollar spent on all other items.
You might also like to view...
What is tacit collusion?
What will be an ideal response?
The optimal mark-up is: m = -1/ (E+1). When the mark-up on cookware equals 50%, then demand elasticity (E) for cookware is:
a. -1 b. -1.5 c. -2 d. -3
Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not
a. choose the quantity of butter to produce. b. set marginal revenue equal to marginal cost to maximize profit. c. have any fixed costs of production. d. choose the price at which it sells its butter.
Whenever the opportunity costs of goods are significantly different in different countries, there are gains from specialization and trade
Indicate whether the statement is true or false
a. True
b. False