Which of the following statements is correct? Marginal utility is the sum of total utility. Total utility is the sum of marginal utilities. Total utility is the product of multiplying price times marginal utility. Total utility is the change in marginal utility as quantity consumed increases.

Question

Business

Chewbacca

17 May, 06:07

Which of the following statements is correct? Marginal utility is the sum of total utility. Total utility is the sum of marginal utilities. Total utility is the product of multiplying price times marginal utility. Total utility is the change in marginal utility as quantity consumed increases.

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Answers (2)

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Genesis Hernandez · Answer 1

Total utility is the sum of marginal utilities.

Explanation:

In the economy, utility is a measure of relative satisfaction. In other terms, it is a term that refers to the total satisfaction that a consumer experiences when consuming a good or service. Given this measure, one can speak of increasing or decreasing utility in a meaningful way and thus explain economic behavior in terms of attempts by the economic agent to increase his or her utility. Utility is often modeled as a unit influenced by the consumption of various goods and services, the possession of wealth and the enjoyment of free time. Total utility, therefore, is the sum of all the marginal utilities that compose the total accumulation of consumption of the individual.

Ariel Good · Answer 2

Total utility is the sum of marginal utilities.

Explanation:

Total customer utility is the total satisfaction that a customer obtains from consuming a product. It can be measured by adding up individual marginal utilities for every time the product is consumed. A product's utility is not fixed and it decreases as more units are consumed.

That is exactly what the law of marginal utility states, e. g. you are very hungry and decide to buy a slice of pizza that provides you 10 utils. Since you like pizza so much, you decide to purchase a second slice, but since you are not hungry anymore, you only obtain 7 utils of satisfaction from consuming pizza. Since you are planning to be out all day, you decide that it would be better to have another slice, since you are not sure at what hour you will eat dinner. But this third slice was really unnecessary and only yields 1 util of satisfaction, since you are basically full and you don't even finish the slice.

The total satisfaction from consuming the 3 slices of pizza = 10 utils form the first slice + 7 utils from the second slice and 1 util form the third slice = 18 utils.

This logic and procedure applies to every single product, since the more you consume of anything, the less utility you obtain from each additional unit consumed.