Describe the relationship between total utility and marginal utility.
Explain if marginal utility can be negative.
Examine the diamond-water paradox. Why are diamonds more expensive than water?
Evaluate the law of diminishing marginal utility.
Identify some items, explaining your reasoning, that do not follow the law of diminishing marginal utility.
Evaluate how the law of diminishing marginal utility can explain the diamond-water paradox.
whereas total utility is defined as the total satisfaction obtained from consuming a particular total quantity of a good or service, marginal utility on the other hand is defined as the satisfaction obtained from consuming an additional quantity of a particular service or good. Negative marginal utility can occur when the consumption of an additional item decreases the total utility. Conversely, the law of diminishing marginal utility states that all else equals as consumption increases the marginal utility derived from each additional unit declines.