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Economics

Study Notes

Marginal Utility Analysis

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Utility is a measure of the satisfaction that we get from purchasing and consuming a good or service

Marginal utility and the demand curve for a product

A fall in marginal utility means that the consumer is getting less extra satisfaction from each subsequent unit consumed. We can infer from this that a rational consumer will not be willing to pay as much money for later units and therefore their willingness to pay will drop. This is one reason why a conventional demand curve for a normal good has an inverse relationship between price charged and quantity demanded.

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