Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 150, respectively. The marginal utility of the sixth wing is utils.

The marginal utility of the sixth wing is 20 utils (136 - 116).

Explanation:

a) Calculation of Marginal Utility from the buffalo wings case:

No. of wings        Total utils     Marginal Utility

4th                         80                

5th                         116                 36 (116 - 80)

6th                        136                 20 (136 - 116)

7th                        150                 14 (150 - 136)

b) In economics, utility is the satisfaction or benefit derived by consuming a product.  Marginal utility is the quantification of the added satisfaction or benefit a consumer derives from consuming additional units of the goods or services.  Economists use the concept to determine how much of an item consumers are willing to purchase (effective demand).

It can be seen that after consuming the first product, the marginal utility of a good or service continues to reduce until it gets to a point where you can identify that no more utility is being derived by the consumer from continued consumption of the particular good or service.  That is, there is a point at which the marginal utility levels out to zero and even becomes negative.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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