what is 'utility' in economics.
<p>what do you understand by utility in economics? explain.</p>
<p>what do understand by want in utility? and what are the characteristics of want?</p>
<p>what do you understand by 'law of diminishing marginal utility'? and what are the assumptions of 'law of diminishing marginal utility' in economics? illustrate.</p>
<p> </p>
<p>consumption is a basic human activity and it is very essential for the survival of any human being.</p><p><em><strong><span style="font-size: 14pt;">utility</span></strong></em><em><strong><span style="font-size: 14pt;">-</span></strong></em></p>
<p>consumption is a basic human activity and it is very essential for the survival of any human being. it, in fact, continues from birth to death. we undertake consumption for the satisfaction of our wants, which can be both physical and psychological. in order to have a proper understanding of the process of consumption we must understand the following words:</p>
<p><em><strong><span style="font-size: 14pt;">(i) want:</span></strong></em></p>
<p>want is a feeling of mental pain, or an experience of lack of satisfaction, which a person feels for not getting a thing. this can he both for physical as well as psychological reasons. if the thing or commodity, in the absence of which we are feeling the pain, is received then our want is fulfilled, that is to say, the feeling of pain disappears. wants lead to an action designed to provide satisfaction. wants have several characteristics.</p>
<p><strong>the first</strong> is that they are unlimited in number. even as we satisfy some of the wants, we get accustomed to new wants.</p>
<p><strong>the second</strong> characteristic is that they are competitive in nature. wants compete with each other for limited resources which a person possesses. this gives rise to choice making as we have already seen in an earlier chapter.</p>
<p><strong>the third </strong>characteristic is their complementarity. it means that many wants go together. one gives rise to another and the satisfaction of one is not complete without satisfying the other also.</p>
<p><strong>the fourth</strong> characteristic of the wants is their recurrent nature. it implies that from the first unit of consumption, but the utility received from the second unit of consumption is 14 only and the total utility for 2 units, therefore, becomes 15 + 14 = 29. the third unit of consumption gives us a utility of 11 only and the total utility becomes 29 + 11 = 40. in this way, the marginal utility goes on diminishing and it finally reaches zero also for the 10th unit of consumption. this means that this commodity is no longer is a position to given any satisfaction. this is also called the <strong>point of satiety</strong>. if somebody still insists on taking an additional unit, then the marginal utility becomes negative and the total utility starts falling. we also find that the total utility is nothing but a summation of individual utilities of each successive unit, and the marginal utility is nothing but an addition to the total utility. we can also show it as follows.</p>
<p>                                           </p>
<p>                                                   <strong>mun = tun - tun-1</strong></p>
<p>where,</p>
<p>mun =  marginal utility of n units</p>
<p>tun =  total utility of n units </p>
<p>tun-1 =  total utility of n-1 units</p>
<p> </p>
<p>if we analyse the above situation we can say, that as we go on taking some units of consumption, our wants go on being partially satisfied. therefore, the intensity of want goes on diminishing and accordingly, the satisfaction also goes on diminishing. after 9 units our want has been fully satisfied and therefore, the next unit would not give any satisfaction and the utility derived from the next unit becomes '0' and after that it becomes negative or in other words the utility becomes disutility:</p>
<p>the above phenomenon is called the <strong>law of diminishing marginal utility</strong>, which can be stated as follows:</p>
<p> </p>
<table style="border-collapse: collapse; width: 99.6344%;" border="1">
<tbody>
<tr>
<td style="width: 97.2879%;">
<p><strong>note -  </strong></p>
<p>the law of diminishing marginal utility was first given by a german writer <strong>hermann heinrich gossen</strong> in the middle of <strong>nineteenth century</strong>. it is, therefore, also called as <strong>'the first law of gossen'</strong>. similarly, the law of equimarginal utility is called <strong>'the second law of gossen'. </strong></p>
</td>
</tr>
</tbody>
</table>
<p> </p>
<p><em><strong>“as we go on consuming more than one unit of consumption, the utility derived from each successive unit of consumption goes on diminishing."</strong></em></p>
<p> </p>
<p>here, it needs to be clarified that marginal utility would be diminishing but at what rate it would be diminishing, is not certain. in the above table we find that sometimes it falls by 1, sometimes by 2 and sometimes by 3 units. it is also to be noted that, it is possible in some cases that initially the marginal utility is increasing, but the phenomenon of increasing marginal utility would be restricted to only first few units of consumption. after that, the application of the law of diminishing marginal utility is inevitable.</p>
<p> </p>
<p><span style="font-size: 14pt;"><em><strong>assumptions of the law -</strong></em></span></p>
<p>the law of diminishing marginal utility is based on the following assumptions.</p>
<p>1. all units of consumption of the commodity are homogeneous in nature i.e. they are exactly the same in size, quantity, quality etc.</p>
<p>2. there is no time gap between the different units of consumption i.e. the process of consumption continues without a time lag.</p>
<p>3. the taste and choice of the consumer for the commodity does not change.</p>
<p>4. this law also assumes that the marginal utility of money is constant (although some economists do not agree with it).</p>
<p> </p>
<p> </p>
hi,

lots of great explanations below, but i fear they might be difficult to truly conceptualize. 

let's start with a pie!

if there's a pie in front of us, that is the market. we'll call it 100 units of pie

we cut the pie in half - one piece (50 pie units) for you, and one piece (50 pie units) for me

scenario 1: we do nothing, we both have 50% market share.

scenario 2: i eat half my pie. my pie slice is now 25 units, yours is still 50 units. as a result, you have 67% of the market share and i have 33%. my "revenues" have fallen and my market share has fallen. your revenues haven't changed but you've gained market share

scenario 3: not only do i eat half my pie, but you also eat 20% of yours. still, i ate more, so even though your "revenues" are down, you've still gained market share.

scenario 4: we both get given more pie (yay). but, i get a whole other 50 units, and you only get 5 more. your "revenues" are up, but you've still lost market share!

i've created the below image for you to visualize this better (click on it to blow it up)...hope this helps! there are a lot of people who may be aware of what private and public means. when you say private, this can be a sector that is owned by someone in particular. a private business is something that is controlled by certain market activities are those which involve remuneration or earning money. non-market activities don’t generally give profits and are for self-consumption. they are not paid for an do not involve money.examples:1. a farmer cultivates primarily for himself and his family and not for earning a profit.2. a mother is preparing food for the family. an annuity is a form of insurance that gives an individual the right to receive a certain amount of money over a particular period of time, usually for the rest of one's life. people usually go for an annuity to plan for their future, Economists recognize three distinct stages of production, which are defined by a concept known as the law of diminishing marginal returns. This law holds that as you add more workers to the production process, output will increase -- but the size of that increase will get smaller with each worker you add. At some point, if you keep adding workers, your output may even start shrinking. The idea of the three stages of production helps companies set production schedules and make staffing decisions.  
Stage one is the period of most growth in a company&#039;s production. In this period, each additional variable input will produce more products. This signifies an increasing marginal return; the investment on the variable input outweighs the cost of producing an additional product at an increasing rate.  
Stage two is the period where marginal returns start to decrease. Each additional variable input will still produce additional units but at a decreasing rate. This is because of the law of diminishing returns: Output steadily decreases on each additional unit of variable input, holding all other inputs fixed.  
In stage three, marginal returns start to become negative. Adding more variable inputs becomes counterproductive; an additional source of labor will lessen overall production. For example, hiring an additional employee to produce cans will actually result in fewer cans produced overall. This may be due to factors such as labor capacity and efficiency limitations. In this stage, the total product curve starts to trend down, the average product curve continues its descent and the marginal curve becomes negative. An increase in the level of production of goods and services (national income) of a country over a certain period of time is referred to as economic growth. Higher level of investment in education sector would lead to higher proportion of educated people working with higher participation in economic activities and, therefore, would lead to higher economic growth. The following are the various ways in which investment in education stimulates economic growth: 

**(i) Imparts Quality Skills and Knowledge**: Education endows people with quality skills and, thereby, enhances their productivity. Consequently, it enhances the income earning capacities of and opportunities for the people. Moreover, it also enables the human capital to utilize the available physical capital optimally. 

**(ii) Develops Mental Abilities**: Education develops the mental abilities of people and helps them to make their choice rationally and intellectually. Education churns out good citizens by inculcating values in them.  

**(iii) Acceptability of Modernization**: An educated public of a nation has greater acceptability of modernization and modern techniques. This not only helps the economy to grow but also facilitates a primitive economy to break the shackles of tradition and backwardness.  

**(iv) Eradicates Skewed Income Distribution**: Education not only increases the income  earning capacity but also reduces the skewed distribution of income, thereby, forms an egalitarian society.  

**(v) Raises Standard and Quality of Living**: Education enhances the income earning capacity of the people, thereby; it raises the standard of living and also improves the quality of living.  

**(vi) Increases the Participation Rate**: It fosters economic development by increasing the participation of people in the process of growth and development.  

**(vii) One Solution for Other Economic** **Problems**: The importance of education is not only limited to making people educated But also in facilitating an underdeveloped economy to solve different but interrelated macro economic problems like poverty, income inequality, population, investments, under utilization of resources. business ethics is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. it applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. it has a set of values and principles that govern the behaviour of individuals in an organisation. the main purpose of business ethics is to guide managers and other employees to perform their jobs in a manner that is socially acceptable.
the following are some of the elements of business ethics.
(a) top management commitment
(b) publication of a ‘code’.
(c) establishment of compliance mechanism
(d) involvement of employees at all levels
(e) measurement of results its relatively price inelastic because, its almost a necessity, and by definition, necessities are said to be price inelastic. brand ­ intangible asset lecture 6 3/6/17 ­ one benefit of a strong brand is that brand equity decays slowly, and helps a  business withstand and recover from its mistakes. ­ brand > product ­ trying to create value that speaks to consumers brand architecture lecture 7 3/8/17 ­ house of brand, branded house, hybrid ­ strategic priorities ▯ strategic brand ­ the future ▯ distinguisher brand ­ enhances the differentiation of another brand —> makes the  parent company interesting ▯ cash cow ­ generates a lot of cash but not a lot fo room to grow ▯ corporate brand ­ may have low visibility to customers, but important to regulatory  bodies, investors, employees, trade groups, partners ▯ fighter/flanker brand ­ insulate the brand from price competition Conspicuous consumption is the spending of money on and the acquiring of luxury goods and services to publicly display economic power—either the buyer's income or the buyer's accumulated wealth. Sociologically, to the conspicuous consumer, such a public display of discretionary economic power is a means either of attaining or of maintaining a given social status. Consumption is regarded to foster economic benefits, by some accounts.  
As proposed by Thorstein Veblen, conspicuous consumption (spending money to buy goods and services for their own sakes) explains the psychological mechanics of a consumer society, and the increase in the number and the types of the goods and services that people consider necessary to and for their lives in a developed economy.