What Is Utility

question 6

Multiple Choice

What is utility?

• A) the satisfaction a person gets from the consumption of a good
• B) a measure of production efficiency
• C) the difference between what a consumer is willing and able to pay for a good
• D) a measure of the amount of "need" people have for a good

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Definitions:

Marginal-Utility Schedules

Charts or tables showing the relationship between the quantity of a good consumed and the marginal utility or satisfaction received from consuming each additional unit.

Maximum Utility

The highest level of satisfaction or benefit that a consumer can obtain from consuming goods and services, given their income and prices of goods.

Satisfaction Per Dollar

A measure of the utility or happiness a consumer gains per unit of expenditure.

MUₐ /Pₐ

The ratio of marginal utility (MUₐ) to the price (Pₐ) of an item, often used in consumer choice theory to evaluate optimal consumption.