This week you have gone to two parties. Assume the total utility you gained from these parties is 100utils. Then you go to a third party, and your total utility rises to 110utils. What is the marginal utility of the third party attended per week? Given the law of diminishing marginal utility, what will happen to total utility and marginal utility when you go to a fourth party this week?
Utility
To find the marginal utility of the third party, we need to calculate the change in total utility resulting from attending the third party.
From the given information, attending the first two parties gave you a total utility of 100utils, and attending the third party increased this total utility to 110utils. Therefore, the marginal utility of the third party is the difference between these two totals:
Marginal Utility of the Third Party = Total Utility from the Third Party - Total Utility from the First Two Parties
= 110utils - 100utils
= 10utils
So, the marginal utility of the third party attended per week is 10utils.
Now, with the law of diminishing marginal utility in mind, we can anticipate what might happen when you attend a fourth party this week. The law states that as you consume more of a particular good or service, the additional satisfaction or utility derived from each additional unit tends to decrease.
Therefore, as you attend a fourth party, the marginal utility is likely to be lower than the 10utils gained from the third party. This means that the increase in total utility from the fourth party will be smaller than the increase from the previous parties.
As for the total utility, it will continue to increase with each additional party as long as the marginal utility of each additional party is positive. However, the rate of increase in total utility will diminish because of the law of diminishing marginal utility. Eventually, you may reach a point where attending additional parties leads to a decrease in total utility, indicating that attending too many parties has a negative effect on your overall satisfaction.