Consumer Behaviour and Demand Test - 6

Utility is a subjective concept and varies from person to person, at different times and at different places. There cannot be a standardised measure for utility. Therefore, the point that utility always measurable is not true.

Alfred Marshall was the dominant figure in British economics from about 1890 until his death in 1924.His specialty was microeconomics —the study of individual markets and industries, as opposed to the study of the whole economy.
It was Alfred Marshall who first discussed the role played by the theory of utility in the theory of value. In Marshall 's theory, the concept of utility is cardinal.

In cardinal utility approch utility is measured in numerical terms.And unit used for measurement is known as utils.

On indifference curve,consumer gets same satisfaction from each combination hence he is indifferent towards all combinations.

In order to increase the consumption of one good,other good must be sacrificed as utility level through out the  indifference cure has to be  same.Due to inverse relation between two goods indifference curve slopes downwards from left to right.

Consumer surplus happens when the price consumers pay for a product or service is less than the price they 're willing to pay. Consumer surplus is the benefit or good feeling of getting a good deal.
Consumer surplus always increases as the price of a good falls and decreases as the price of a good rises.

As per law of dimnishing marginal utility, as the consumer goes on conuming MU derived from each succesive unit goes on falling,becomes zero and finally turns negative  

utility represents satisfaction experienced by the consumer from a good.

Point of Satiety is defined as ''the point where marginal utility of any commodity is zero ''. Thus it is a point where satisfaction of any commodity is zero.

Average utility is nothing but utility derived by per unit of consumption.

Measurement unit for utility is known as utils.

MU is the concept used in cardianl utility approch which was given by alferd marshal.

An  indifference curve  is a graph showing combination of two goods that give the consumer equal satisfaction and utility.

Consumer surplus, also called social surplus and consumer 's surplus, in economics, the difference between the price a consumer pays for an item and the price he would be willing to pay rather than do without it.