2.7 The concept of the margin

Cards (6)

  • Diminishing marginal utility
    The extra benefit gained from consumption of a good generally declines as extra units are consumed; this explains why the demand curve is downward sloping.
  • Margin
    The effect of an additional action.
  • Marginal utility
    Marginal utility is the utility / satisfaction gained from the consumption of each additional unit.
  • Total utility
    Total utility is the overall benefit of consuming a good
  • The utility someone gains from consuming a good , informs their willingness to pay for it , so , if marginal utility was measured in money terms , the marginal utility curve becomes the persons demand curve .
  • As marginal utility decreases , the price a consumer would be willing to pay decreases , which explains why demand curve is downwards sloping