Econ Questions !!?

Question

What is the relationship between total utility and marginal utility

Answer 1

see the slope. as long a marginal utility >0 (a positive number) total utility is rising. If marginal utility = 0 then total utility is at its maximum point. If marginal utility<0 (a negative number) total utility is falling.

The slope of the total utility curve is marginal utility. We will see that marginal of anything is always the slope of the total curve we happen to be talking about. So whenever you use the marginal concept it is simply a slope of something and can be interpreted as the change in the vertical axis divided by the change in the horizontal axis.

Answer 2

Total and marginal utility. The utility that an individual receives from consuming a certain amount of a particular good or service is referred to as that individual's total utility. The marginal utility of a good or service is the addition to total utility that an individual receives from consuming one more unit of that good or service.

Law of diminishing marginal utility. The law of diminishing marginal utility states that the marginal utility that one receives from consuming successive units of the same good or service will eventually decrease as the number of units consumed increases. As an example of the law of diminishing marginal utility, consider the utility that one obtains from drinking successive glasses of lemonade on a hot day. Suppose the first glass just begins to quench one's thirst. After two glasses, however, the thirst has all but disappeared. A third glass of lemonade might also provide some utility, but not as much as the second glass. A fourth glass cannot be finished. In this example, the marginal utility—the addition to total utility that one obtains from drinking lemonade on a hot day—is increasing for the first two glasses but is decreasing beginning with the third glass and would continue to decrease if one were to consume further glasses.

Answer 3

Because this may not be a cause and effect relationship. The one has nothing to do with the other. It is just a coincidence. As an example, using the correlation coefficient model in mathematics we could show that alcoholism increases directly proportional to the number of theology school graduates. Obviously this is a fallacy as more ministers don't create more drunks. However, mathematically it looks as if they do. Therefore, never claim cause and effect relationships unless you have more or better empirical evidence.