The consumer is only willing to consume up to the point of maximum satisfaction

The consumer is only willing to consume up to the

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The consumer is only willing to consume up to the point of maximum satisfaction - where an additional unit of consumption yields additional satisfaction. Beyond this point, the consumer begins to incur decrease of TU or satisfaction (i.e. dissatisfaction or negative MU), The Utility Function Consump- tion (Qty) Total Utility Marginal Utility 1 7 7 2 13 6 3 18 5 4 22 4 5 25 3 6 27 2 7 28 1 8 28 0 9 27 -1 10 25 -2 11 22 -3 12 18 -4 13 13 -5 14 7 -6 15 0 -7
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The Utility Function -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Total Utility Marginal Utility
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The 1st glass of water is more satisfying than the 2nd (although 2 glasses is more satisfying than one) One is willing to consume more glasses of water so long as an additional satisfaction is achieved. But beyond this point, an additional glass is no longer satisfying leading to lower levels of satisfaction or marginal utility . This is called diminishing marginal utility. Diminishing Marginal Utility means that, as more of a good is consumed, the consumption of additional amounts will yield smaller additions to utility. CONCLUSION! The Diminishing Marginal Utility (MU) causes the Total Utility (TU) to decline eventually, hence, maximum consumption is only up to the point of maximum utility. The Glass of Water Example
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  • Winter '19
  • Joseph Anthony Romero

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