Reading/Study Guide - Chapter 7 – Consumer Behavior
Answer the following:
- Define marginal utility:
- Explain the law of diminishing marginal utility:
- What is the difference between marginal utility and total utility?
- Write the formula for the utility maximizing rule:
- Is it ever rational to consume the next unit if you know that you’ll have negative marginal utility?
- See the practice question in class for a better understanding of how to apply the utility maximizing rule?