Question 1(B):
Match the columns:
ANSWER:
The above columns can be correctly matched as:
Explanations:
1. Marginal utility is the addition to the total utility, due to the consumption of an additional unit of a commodity. In other words, it can be defined as the utility derived from the last unit of the commodity consumed.
Algebraically,
MUn = TUn – TUn –1
2. The maximum point of the total utility curve is also known as the point of satiety. Beyond this point, total utility starts declining with consumption of every successive unit of consumption. It is only at this point of satiety that the consumer gets the maximum amount of satisfaction from the consumption of a commodity.
3. Form utility is the utility derived by changing the physical characteristics of a product. Since furniture is made by changing the original form of wood, the creation of furniture from wood is an example of form utility. This type of utility increases with the change in the structure or shape of the good.
4. One of the basic assumptions of the law of Diminishing Marginal Utility is that the utility is measurable in numbers. Without such an assumption it would have been difficult to explain and represent the exact behaviour of the marginal utility.
5. Service utility is the utility created by providing services to the people. Since a teacher, by teaching in a class, renders service to students, knowledge imparted by a teacher to the students is a form of service utility.
