Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

What do you mean by "Marginal utility of money"?

Options:

Rupee worth of satisfaction

Satisfaction derived by consuming a product

Both of them

None of them

Correct Answer:

Rupee worth of satisfaction

Explanation:

The correct answer is Option 1: Rupee worth of satisfaction

Marginal utility of money which is also known as rupee worth of satisfaction is the utility that the consumer expects to obtain from a standard basket of goods which he or she can buy for a rupee. The marginal utility of money represents the additional utility or satisfaction that a consumer derives from an additional unit of money. It indicates how much extra satisfaction a consumer gains from receiving or spending an additional rupee. As the consumer's income increases, the marginal utility of money generally decreases, reflecting the diminishing marginal utility of wealth.