You must complete The Concept of Unemployment and Self Employment to unlock this Lesson.

ELEMENTARY TREATMENT OF THE UTILITY THEORY

CONTENT

  1. The Concept of Utility Theory
  2. Meaning of Utility
  3. Total Utility
  4. Average Utility
  5. Marginal Utility
  6. Law of Diminishing Marginal Utility
  7. Utility Maximization and Derivation of Demand Curve
  8. Derivation of Demand Curve from the Utility Theory

 

The Concept of Utility Theory

Utility theory is based on the fact that satisfaction which consumers derived from consumption of goods and services can be measure quantitative.

Meaning of Utility

Utility is the amount of satisfaction that a consumer derives from the consumption of goods and services at a particular time.

Since we have assumed that utility can be measured, we should be able to determine such facts: what is the Total Utility a consumer derives from the consumption of a commodity; or what are the marginal utilities derived from consuming several units of a commodity? As we said earlier, this is premised on the assumption that consumption can be measured. Let’s examine these in detail

Total Utility

This is the total amount of satisfaction a consumer derives from the consumption of several quantities of a commodity. 

Lesson tags: Economics Lesson Notes, Economics Objective Questions, SS2 Economics, SS2 Economics Evaluation Questions, SS2 Economics Evaluation Questions Second Term, SS2 Economics Objective Questions, SS2 Economics Objective Questions Second Term, SS2 Economics Second Term
Back to: ECONOMICS – SS2 > Second Term
© [2022] Spidaworks Digital - All rights reserved.