Question

Maddie ordered a child's backpack online from Target, but after receiving it, decided it was too small for her child and returned it for a refund thus reversing the effect of ___ utility.

1) Form utility
2) Place utility
3) Time utility
4) Possession utility

Answer 1

Maddie's return of the child's backpack she ordered from Target reversed the effect of possession utility, which is the satisfaction gained from owning a product. This action aligns with the concept of diminishing marginal utility, where each additional unit of consumption brings less satisfaction than the previous.

Step-by-step explanation:

Maddie ordered a child's backpack online from Target, and upon deciding that it was too small for her child, she returned it for a refund, thereby reversing the effect of possession utility. Possession utility refers to the increase in satisfaction a consumer gains from owning a product. Since Maddie returned the backpack, the satisfaction and utility derived from owning the item are negated.

The concept of utility is central to understanding consumer behavior. Economists assert that the more of a good one consumes, like slices of pizza, the more utility one obtains, up until a point. This point is referred to as the law of diminishing marginal utility, which signifies that the additional satisfaction gained from consuming each additional unit decreases after a certain amount of consumption.