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Utility. Marginal utility. Equilibrium of the consumer. The condition of equilibrium. The principle of equal utility.






Utility of the good or commodity - its ability to satisfy some human need. The utility can be divided into objective and subjective. The problem of measuring the subjective utility that each person could have a different assessment of the utility, which differ significantly from the average. The utility is a prerequisite to any object acquired an exchange value. Utility is an abstract concept rather than a concrete, observable quantity. The units to which we assign an " amount" of utility, therefore, are arbitrary, representing a relative value. Total utility is the aggregate sum of satisfaction or benefit that an individual gains from consuming a given amount of goods or services in an economy. The amount of a person's total utility corresponds to the person's level of consumption. Usually, the more the person consumes, the larger his or her total utility will be. Marginal utility is the additional satisfaction, or amount of utility, gained from each extra unit of consumption. Although total utility usually increases as more of a good is consumed, marginal utility usually decreases with each additional increase in the consumption of a good. This decrease demonstrates the law of diminishing marginal utility. Total utility will increase at a slower pace as an individual increases the quantity consumed. Take, for example, a chocolate bar. Let's say that after eating one chocolate bar your sweet tooth has been satisfied. Your marginal utility (and total utility) after eating one chocolate bar will be quite high. But if you eat more chocolate bars, the pleasure of each additional chocolate bar will be less than the pleasure you received from eating the one before - probably because you are starting to feel full or you have had too many sweets for one day.

Consumer equilibrium: The state of balance achieved by an end user of products that refers to the amount of goods and services they can purchase given their present level of income and the current level of prices. Consumer equilibrium allows a consumer to obtain the most satisfaction possible from their income. A Consumer equilibrium is a situation in which a person gets maximum satisfaction..

A Consumer equilibrium is a situation in which a person gets maximum satisfaction..

The Law of Equa Utility is an extension to the law of diminishing marginal utility. The principle of equal-marginal utility explains the behavior of a consumer in distributing his limited income among various goods and services. This law states that how a consumer allocates his money income between various goods so as to obtain maximum satisfaction.

 


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