Marginal Utility and Consumer Choice

3 years ago

Microeconomics

Marginal utility (MU) – Additional satisfaction obtained from consuming one additional unit of a good.

Diminishing marginal utility – Principle that as more of a good is consumed, the consumption of additional amounts will yield smaller additions to utility.

MRS = MU_X/MU_Y = P_X/P_Y

Equal marginal principle = Principle that utility is maximized when the consumer has equalized the marginal utility per dollar of expenditure across all goods.

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Bijay Satyal

Bijay Satyal

Nov 24, 2021

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