Based on the Marginal Utility Theory to Analyze Students’ Demand for

2131 Words9 Pages
Based on the marginal utility theory to analyze students’ demand for… 1. Introduction:.….…………………………3 1.1 Origin of Marginal Utility Theory………………………….3 1.2 Development of Marginal Utility Theory…………………..3 2. The analysis of marginal utility theory...4 2.1 The definition of marginal utility theory………...…………4 2.2 The understanding of marginal utility theory………...……5 2.3 The main influences on marginal utility……….……………5 2.4 The paradox of water and diamonds………………………..8 3. Discussion on marginal utility theory….8 3.1 The limitation of marginal utility theory………………….8 4. Conclusion………………………………..9 5. Reference………………………………..10 1. Introduction 1.1 Origin of…show more content…
Robert S. and Daniel L. say: “Marginal utility measures the additional satisfaction obtained from consuming one additional unit of a good.” (Robert S. and Daniel L. Microeconomics 2010). Diminshing marginal utility is the utility from one more unit consumption increase will decrease. Equal marginal principle, as Robert S. and Daniel L. say: “ It is maximized when the consumer has equalized the marginal utility per dollar of expenditure across all goods.” [pic] 2.2 The understanding of marginal utility theory Marginal utility, in other word, is the difference in your satisfaction when you are offered with an additional one unit of a good or service. For example, when you are hungry, you will be very happy with someone offering you a piece of bread. If you got the second one, you will still be happy. So do the third or fourth one. But when it comes to the fifth or sixth piece, you may be less happy with that. When it reaches to the seventh piece, you may become unhappy with the offer. It is usual consumers’ psychology. In the process, people increasing satisfaction of getting one more piece of bread is marginal utility. And just like full filling a bottle with water, people will finally reach a point that we are not able to accept more good or service or even the water will spill out which likes the satisfaction remain the same as the previous one additional unit. Marginal utility theory has three main features. First, it

More about Based on the Marginal Utility Theory to Analyze Students’ Demand for

Open Document