Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What does Marginal Utility refer to?

1. The total satisfaction gained from all units consumed

2. The satisfaction gained from consuming one additional unit of a good or service

3. The overall value provided by a good in a market

4. The decrease in price after an increase in supply

The correct answer is: The satisfaction gained from consuming one additional unit of a good or service

Marginal Utility refers specifically to the satisfaction or utility that a consumer derives from consuming one additional unit of a good or service. The concept of marginal utility is foundational in economics and is crucial for understanding consumer choice and demand. When consumers decide to purchase more of a good, they consider not just the total satisfaction they receive but also the extra satisfaction gained from that additional unit. This incremental perspective helps businesses assess how changes in production or pricing could affect consumer demand. In the context of the other choices: the total satisfaction from all units consumed relates to total utility, which encompasses a broader range of consumption than just one additional unit; the overall value provided by a good in a market refers more to market value or economic valuation rather than individual consumer experience; and the decrease in price after an increase in supply relates to supply and demand dynamics and does not relate to consumer utility or satisfaction directly. Thus, the focus of marginal utility is precisely on the additional satisfaction attributed to the consumption of one more unit, which makes the stated choice the most accurate.