Explain marginal utility and diminishing marginal utility. Provide an example of each concept. Explain the income effect...

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Economics

Explain marginal utility and diminishing marginal utility.Provide an example of each concept.
Explain the income effect and the substitution effect.
Provide me with one example of the endowment effect.
Explain economic profit and how it is â€œbetterâ€ than accountingprofit.
Provide me 3 examples of sunken costs.
Explain how American farmers have utilized the concept ofeconomies of scale to increase profits.

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The concept of Marginal utility is used widely in cardinal utility theory According to the proponents of this theory utility or use of an item can be measured accurately through mathematical functions Therefore given a function that represents total utility of a good for an individual the change in total utility derived from the good when the amount of good consumed increases by 1 unit is called marginal utility For example the additional satisfaction a person gets by watching another movie show or purchasing a new dress or simply by drinking 1 more unit of apple juice etc In all these cases we are measuring the change whether positive or negative in existing satisfaction level from a good if an additional unit is increased for consumption Diminishing marginal utility states that keeping other things constant the additional utility derived from the consumption of good diminishes as quantity See Answer

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