Certified Supply Chain Professional (CSCP) Practice Exam

What is defined as marginal utility?

1. The total satisfaction from all units consumed

2. The additional satisfaction from consuming one more unit

3. The cost of producing additional units

4. The overall demand for a product

The correct answer is: The additional satisfaction from consuming one more unit

Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one more unit of a good or service. This concept is vital in understanding consumer choice and behavior in economics, as it helps analyze how much value or satisfaction is received from incremental increases in consumption. When a consumer weighs whether to consume an additional item, they assess the added satisfaction that will come from that choice. If the marginal utility of the next unit exceeds the consumer's willingness to pay, they will likely decide to consume it. This decision-making process is influenced by the diminishing marginal utility principle, which states that as more units of a good are consumed, the additional satisfaction gained from consuming more units typically decreases. This understanding helps explain consumer behavior in markets, guiding businesses in making pricing decisions and adjusting supply to meet demand based on consumer satisfaction levels. The other options, while related to economic principles, do not accurately describe marginal utility; for example, total satisfaction relates to all units consumed, production cost pertains to supply aspects, and overall demand encompasses broader market dynamics.