## What is the marginal utility per dollar?

Marginal utility per dollar is the amount of additional utility José receives given the price of the product.

How do you maximize utility per dollar?

A Rule for maximizing Utility If a consumer wants to maximize total utility, for every dollar that they spend, they should spend it on the item which yields the greatest marginal utility per dollar of expenditure.

### What will happen if MUa Pa MUb PB?

If MUa / Pa < MUb / Pb, then money should be shifted from a to b until MUa / Pa = MUb / Pb. When the price of a good falls, consumers will have more money left after purchasing the good, and can buy more of it (and everything else).

How do you calculate utils?

An assigned base value for utils is needed because theoretically there is no real value for utility satisfaction in general. To find total utility economists use the following basic total utility formula: TU = U1 + MU2 + MU3 … The total utility is equal to the sum of utils gained from each unit of consumption.

## How do you calculate marginal utility from total utility?

How Do You Calculate Marginal Utility and Total Utility? The basic formula to calculate total utility is as follows: TU = U1 + MU2 + MU3 …

What is the marginal utility per dollar and how is it calculated quizlet?

What is the marginal utility per dollar and how is it calculated? The marginal utility per dollar equals the marginal utility of the good or service divided by its price. The marginal utility per dollar tells the additional utility gained from spending one more dollar on a good or service.

### What is the name of law of equi marginal utility?

The Law of equi-marginal Utility is another fundamental principle of Economics. This law is also known as the Law of substitution or the Law of Maximum Satisfaction.

Why is marginal utility of money constant?

Constant marginal utility of money means that the utility per unit of money remains unchanged for the consumer. This implies that each additional unit of money provides the consumer with the same level of satisfaction. This leads to the use of money as the measuring rod in utility analysis.

## What is marginal utility and total utility?

While total utility measures the aggregate satisfaction an individual receives from the consumption of a specific quantity of a good or service, marginal utility is the satisfaction an individual receives from consuming one additional unit of a good or service.