A Level Economics AQA Practice Exam

What does the term Marginal Utility (MU) represent?

1. The total satisfaction from all units of a good consumed

2. The additional satisfaction gained by consuming one more unit

3. The reduction of satisfaction over time

4. The increase in price due to scarcity of a good

The correct answer is: The additional satisfaction gained by consuming one more unit

The term Marginal Utility (MU) specifically refers to the additional satisfaction or pleasure that a consumer receives from consuming one more unit of a good or service. It is a key concept in understanding consumer behavior and decision-making, illustrating how individuals evaluate the benefit of their purchases. When a consumer considers buying an additional unit of a product, they assess the extra satisfaction they will gain from that additional unit compared to what they have already consumed. Generally, as consumption increases, the Marginal Utility tends to decrease, which is often referred to as diminishing marginal utility. The other options address different concepts related to consumption and utility. The total satisfaction from all units consumed pertains to total utility, which reflects the cumulative satisfaction from all units rather than the additional satisfaction from the last unit. The reduction of satisfaction over time does not accurately define marginal utility, and while scarcity can impact price, that relationship does not describe the concept of marginal utility at all. Thus, the correct definition of Marginal Utility is encapsulated in the idea of gaining additional satisfaction from consuming one more unit.