Key terms in this topic Utility Kinds of Utility Law of Diminishing Marginal Utility(LDMU) Limitations of LDMU Importance of LDMU
Starter activity Imagine you are really thirsty after a P.E lesson and I offer you water to drink. How many glasses of water would quench your thirst? What do you get when you drink water? Why do you say – enough – I can’t drink any more after taking two or three glasses of water? Discuss in your group
UTILITY The satisfaction of wants and needs obtained from the use or consumption of goods and services. The terms utility and satisfaction are, for the most part, used interchangeably in economics.
TOTAL UTILITY The total satisfaction of wants and needs obtained from the use or consumption of a good and service. Total utility is most often used in consumer demand theory to indicate how much overall satisfaction someone obtains from a given activity.
Marginal Utility The additional utility, or satisfaction of wants and needs, obtained from the consumption or use of an additional unit of a good. It is specified as the change in total utility divided by the change in quantity. Marginal utility indicates what each additional unit of a good is worth to a consumer.
How can we measure utility ? Discuss in pairs – (10minutes) How can you assess the money spent on school uniform? How can you assess the worth of money you spent on your last dental visit? How might you justify your mobile bills?
Plenary Write three questions on what you have learnt today. Compare your questions with your friends.