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Marginal and Total Utility

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You go to an auction and set a maximum price of $100 you are willing to bid on an item. However, you are fortunate and purchase it for $50.

1) Does the lower price alter the marginal utility you originally placed on the item?
2) Is your potential total utility increased because of the lower price?

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This solution provides a detailed explanation of the given economics problem.

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1) Marginal utility is the additional satisfaction, or amount of utility, gained from each extra unit of consumption.
It is calculated by a change in total utility divided by the total in quantity. Here, the change in total utility is 100 because you were willing to pay 100 for the item so it was worth $100 of utility for you. When the price ...

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