Marginal Utility Economic Measure
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A Marginal Utility Economic Measure is an micro-economic measure that quantifies the additional satisfaction or benefit gained from consuming or using an additional unit of a good or service.
- Context:
- It can (typically) be used to assess the incremental benefit or satisfaction gained from an additional unit of consumption.
- It can (typically) decrease as more units are consumed, following the Law of Diminishing Marginal Utility.
- It can (often) be a critical factor in Consumer Decision-Making and Market Demand Analysis.
- It can (often) be measured in terms of changes in utility over changes in quantity.
- It can be used in conjunction with Price Elasticity of Demand to determine optimal pricing strategies.
- It can inform Economic Theory regarding consumer preferences and choices.
- It can be crucial in understanding the concept of Consumer Surplus.
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- Example(s):
- If a consumer derives great satisfaction from the first cup of coffee in the morning but less from the second or third cup, this demonstrates the concept of marginal utility.
- In a Project Cost-Benefit Analysis, the marginal utility economic measure might be used to determine the additional benefit derived from each unit of investment in the project.
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- Counter-Example(s):
- See: Project Cost-Benefit Analysis, Microeconomics, Utility Theory, Consumer Behavior.