Marginal utility is the total amount of satisfaction after buying a particular amount of goods or commodity.
1. Cordinal utility : which can be quantified talk about values for example i liked the pizza for 10 units
2. Ordinal utility : It is measured in ranking among many choices for example who is the best batsman in current times it can be judged by giving rank to the batsman.
Maximum production - additional of total product for extra amount of labour
Law of diminishing marginal return : as the usage of input increases with other input fixed the points will eventually reach at which the resulting addition to output decreases for eg if i am having kfc for dinner everyday the utility for the particular product will decrease after certain period of time.
As law of diminishing marginal utility refers that if an event take place in a regular interval of time the utility of the event decreases eg. World cup of cricket if it start taking place in regular interval no people will take interest in the world cup.
If all input in the production rate is doubled three things take place
1. Output increases more than proportionately with increase in input
2. Output increases in the same proportion as the input constant return to sale.
3. Output increases less than proportionlly with increase in the input.
For example if a company appoints 10 employee in the place to take care of their clients where appointibg 5 will easily do the job , no need of appointing 10 for the time being productivity will rise then after than there will be less productivity. After a period of time productivity will stop.
Economics when applied to real life sounds beautiful. this blog is for those students who are discovering the different facets of economics applications and want to share their discoveries.
Friday, August 3, 2018
Diminishing marginal utility
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