# Essential Graphs for Microeconomics Assignment

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Allocation efficiency meaner that a good’s output is expanded until its marginal benefit and marginal cost are equal. No resources beyond that point should be allocated to production. Theory: Resources are efficiently allocated to any product when the MBA and MS are equal. Essential Graph: Application : External costs Ana External Be External Costs and Benefits occur when some of the costs or the benefits of the good or service are passed on to parties other than the immediate buyer or seller.

Diminishing Marginal Utility Definition: As a consumer increases consumption of a good or service, the additional usefulness or satisfaction derived from each additional unit of the good or service decreases. Utility is want-satisfying power?? it is the satisfaction or pleasure one gets from consuming a good or service. This is subjective notion. Total Utility is the total amount of satisfaction or pleasure a person derives from consuming some quantity. Ђ Marginal Utility is the extra satisfaction a consumer realizes from an additional unit of that product. Theory: Law of Diminishing Marginal Utility can be stated as the more a specific product consumer obtain, the less they will want more units of the same product. It helps to explain the downward-sloping demand curve. Essential Graph: Teaching Suggestion: begin lesson with a quick “starter” by tempting a student with how many candy bars (or whatever) he/she can eat before negative marginal utility sets in when he/she gets sick!