[swetha305]

Good day.

1. "The utility derived from consumption is tangible and unobservable. Therefore, the
utility concept has no practical value." How to explain this statement?

2. What would an upward-sloping demand curve imply about the marginal utility derived
Form consumption? Why aren't upward-sloping demand curves observed in the real
World?




Regards,
Swetha

[icouldbeguessin]

1. Because circular reasoning gives you no empirical value.

2. Marginal utility is the contribution to total utility made by consumption of the next unit of the commodity. For example, if you ate 2 chocolate bars, the marginal utility of the third chocolate bar would be that amount of utility added to total utility by its consumption.

In general, marginal utility diminishes as more of a commodity is consumed - the third chocolate bar adds less marginal utility to total utility than did the second chocolate bar.

Even if you LOVE chocolate and were willing to pay your $1.29 for the first two chocolate bars, by the time you finished the second one, would you still pay $1.29 for the third? Probably not - you are satiated.

This is why demand curves typically don't can't upwards.