What you know about utility utility kya he

What you know about utility

Utility – a new classical theory which discuss about our satisfactions which we receive from every single units of consumption. In it, we count our satisfaction from consumption by taking some things in a series. In starting, we get more satisfaction but every new consumption of same units, it decreases our satisfaction level with every new consumption with step by step. In it, we assume that we are able to count our satisfaction in a unit and we call it “util”.

knowledge about Utility

Some assumption for theory –

ü  We are able to count our satisfaction level with every single unit of same consumptions

ü  Money is the main parameter for this

ü  Marginal utility of money remain unchanged or same

ü  We know the quality or availability of  different product

ü  We know the price of different product

ü   There is no alternative available

        

Total utility – when consumption the same thing in a series, he get utility from that but our utility of consumption is decreasing with every new consumption of the same unit. If we add all the utility of same things then we get the “total utility”. For example –

1^st banana give us a utility of 10 units,

2^nd banana give 7.5 units,

3^rd banana give 5 units,

4^th banana give 2.5 units and if we add all these utilities of banana then we get the total utility of banana which we receive.

Marginal utility – when we start the consumption of any goods and services, 1^st units give us a high level of satisfaction, 2^nd give us a less satisfaction then 1^st, 3^rd give us a less satisfaction then 2^nd. So every new units of consumption have less utility then it’s previous. Other way, we can say that marginal utility is decreasing with every new unit. For example –

1^st units have 10 & 2^nd units have 7.5 so total marginal utility is (10+7.5=17.5).

2^nd units 7.5 & 3^rd units have 5 so total marginal utility is (7.5+5=12.5).

3^rd units have 5 & 4^th have 2.5 so total marginal utility is (5+2.5=7.5). 



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