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The concept of marginal utility involves what?

Whitney Matthews

in Homework Help

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James Washington on June 4, 2018

Think of it this way: if you are without money and without home, and you find yourself with a ten-dollar bill while walking down the street, those $10 are extremely valuable to you. Banknotes of 10 means that you will be able to buy food and fend off hunger for another day. On the other hand, if you're Bill Gates, and you find a $10 bill in the street, those $10 have relatively little value to you. Marginal utility refers to the value derived from the acquisition of an additional unit of a resource. The Law of Diminishing Marginal Utility states that each unit of a resource you acquire will be a little less valuable than the previous unit. This is the reason that the progressive tax system that many nations (including the united states) to use. The rich are taxed at higher rates, because the extra dollars are a little less valuable to them.


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