Two people buying the same quantity of a good at the same price do not have the same
Explanation of Solution
Relative comparison of two different people satisfaction is not possible. Two people consuming the same quantity of good at the same price can have different satisfaction level according to their interest, so they cannot have the same marginal utility. Interpersonal utility comparison is not possible.
CONCEPT INTRODUCTION:
Marginal utility:
Marginal utility measures the additional fulfilment a customer earns from expending extra units of products or services. The idea of marginal utility is utilized by financial specialists to decide the amount of a thing customers are eager to buy. Positive marginal utility happens when the utilization of an extra thing builds the all-out utility, while negative marginal utility happens when the utilization of an extra thing diminishes the absolute utility.
Want to see more full solutions like this?
Chapter 10 Solutions
Exploring Microeconomics
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
- Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning