Discussion
Which of the following formulas can be used to calculate Marginal Utility (MU) ?
Answer: D
Marginal utility is calculated as \(TU_{n} - TU_{n-1}\).
Marginal utility is the addition to total utility from consuming one more unit of a good. It is therefore the total utility after n units minus the total utility after n - 1 units. If total utility is 30 after three cups of tea and 36 after four, the marginal utility of the fourth cup is 36 - 30 = 6.
The other formulas give different quantities. TU/N is average utility, the total divided by the number of units. AU × N multiplies average utility back up to total utility. TU - AU has no economic meaning and does not give the utility of the extra unit.
No comment is present. Be the first to comment.
Loading…
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development