ECON1101 - Utility

Utility is the satisfaction derived from people's consumption activities.

## Utility Maximisation Assumption

The assumption that people try to allocate their incomes so as to maximise their satisfaction.

## Marginal Utility

The additional utility gained from consuming an additional unit of a good in a given period of time.

### Calculating Marginal Utility

(1)
\begin{align} \frac {\text{Utility per Unit}}{\text{Dollars per Unit}} \end{align}

## Law of Diminishing Marginal Utility

The tendency for the marginal utility to diminish as consumption increases beyond a certain point.

## Marginal Product

The additional output from the addition of an extra unit of a resource; e.g. workers

page revision: 2, last edited: 15 Aug 2011 11:57