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Unformatted text preview: 2, 3. ..etc. The second column shows how the total utility or satisfaction that a consumer derives behaves with every increase in the stock. The total utility has been continuously or absolutely increasing as 20, 35, 44etc. The third column shows the difference in the utilities of two successive units. This is the additional benefit or marginal utility . One would notice that marginal utility falls progressively (20, 15, 9. ..etc.) as the stock increases. This is the diminishing marginal utility tendency . It is also known as a relative fall in utility. This kind of a reduction is due to the progressive satisfaction of wants. As the utility of the good increases, the succeeding units are less intensely and less urgently needed by the consumer. Finally, in the fourth column marginal utility has been converted in money units with the conversion rule 1u = 2c....
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This note was uploaded on 11/26/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10