The Joy of Ice Cream: Exploring Marginal Utility
How does consuming multiple ice cream cones affect marginal utility?
Suppose that consuming one ice cream cone gives you a utility of 20. If you are offered a second ice cream cone, the marginal utility of that second ice cream cone will likely be:
a) Higher than 20
b) Equal to 20
c) Lower than 20
Answer:
The marginal utility of the second ice cream cone will likely be lower than 20.
When it comes to consuming multiple ice cream cones, we enter the realm of marginal utility. The concept of diminishing marginal utility suggests that as we consume additional units of a good, the satisfaction gained from each additional unit tends to decrease.
In the scenario provided, the first ice cream cone gives a utility of 20. However, as you enjoy the second ice cream cone, the marginal utility is likely to be lower than the initial 20. This means that the satisfaction or joy you derive from the second ice cream cone will be less compared to the first one.
This phenomenon is not unique to ice cream cones but is a common occurrence with various goods and services. Understanding how marginal utility decreases can help us make informed choices about consumption and preferences.