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Marginal Utility
Marginal utility is the additional satisfaction or benefit resulting from a one-unit increase in the consumption of a good. More formally, it is the rate of change in total utility as the quantity of the good consumed increases. In economic models, marginal utility is often calculated using partial derivatives.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
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A coffee shop is considering staying open for an additional hour, from 4 PM to 5 PM. The table below shows their total revenue and total costs for different hours of operation. Based on an analysis of the change from the 4th to the 5th hour, what is the most logical decision and why?
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A software company has invested $5 million in developing a new product. Due to unexpected competition, the projected future revenue from the product has dropped to $3 million. The company estimates it will cost an additional $1 million to complete the product. Based on a rational analysis of incremental changes, the company should abandon the project because the total cost ($6 million) will exceed the total revenue ($3 million).
Marginal vs. Average Analysis in Decision-Making
A rational decision-maker thinks at the margin by comparing the additional benefits and additional costs of a small change. For each scenario below, match it with the correct marginal comparison that should guide the decision.
Rational individuals make decisions at the margin. This means they will choose to take an action only if the additional, or marginal, benefit of the action is at least as great as the marginal ____.
A firm is considering whether to produce one additional unit of a good. Arrange the following steps in the logical order a rational decision-maker would follow when thinking at the margin.
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A company's total cost of producing widgets is shown in the table below. What is the marginal cost of producing the 3rd widget?
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Learn After
Calculating Marginal Utilities Using Partial Differentiation
An individual is consuming slices of pizza, and their total satisfaction from consumption is measured in 'utils' as shown in the table below. What is the additional satisfaction gained from consuming the fourth slice of pizza?
Slices Eaten Total Satisfaction (utils) 0 0 1 12 2 22 3 29 4 33 5 34 Consumer Behavior at a Buffet
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If an individual's total satisfaction continues to increase as they consume more units of a good, then the additional satisfaction they gain from each new unit must also be increasing.
A consumer's total satisfaction from drinking cups of coffee per day is shown in the table below. Match each consumption step with the corresponding additional satisfaction (marginal utility) gained during that step.
Cups of Coffee Total Satisfaction (utils) 0 0 1 10 2 18 3 23 4 25 5 25 Evaluating Consumer Satisfaction
As a person consumes more and more units of a specific good, the total satisfaction they receive generally increases, but the additional satisfaction gained from each new unit tends to decrease. The economic term for this additional satisfaction from consuming one more unit is known as __________.
A hiker is consuming energy bars on a long trail. The table below shows the total satisfaction (utility) they receive from eating a certain number of bars. Arrange the following consumption choices in order, from the one that provides the most additional satisfaction to the one that provides the least.
Energy Bars Eaten Total Satisfaction (utils) 0 0 1 20 2 35 3 45 4 50 5 52 Optimal Snack Choice
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