Question

In microeconomics, the term utility references the?

1) relative scarcity of a good or service
2) usefulness of a good or service
3) satisfaction derived from consumption of a good or service
4) slope of a consumer's demand curve for a good or service

Answer 1

Utility in microeconomics is the satisfaction derived from consuming a good or service, and it diminishes with each additional unit consumed, which is explained by the law of diminishing marginal utility.

Step-by-step explanation:

In microeconomics, the term utility refers to the satisfaction derived from consumption of a good or service. This concept is crucial to understanding consumer behavior, as individuals consume goods and services in order to increase their overall utility or satisfaction. The law of diminishing marginal utility is a principle that illustrates the decrease in additional satisfaction a person receives as they consume more of the same item.

The utility that someone receives from their first unit of consumption is usually higher than what they get from later units. For instance, the first slice of pizza might provide substantial satisfaction, while the sixth slice offers much less. This diminishing additional satisfaction is known as diminishing marginal utility, which is a central topic in the study of consumer choices within microeconomics.