TESTING THE LAWS OF DIMINISHING MARGINAL UTILITY Veny Adilia Pusapsari Academic Investigation Sinarmas World Academy November 2011
Mar 14, 2016
TESTING THE LAWS OF DIMINISHING MARGINAL UTILITY
Veny Adilia Pusapsari
Academic Investigation
Sinarmas World Academy
November 2011
Abstract
The research question of this academic investigation is “How is the level of
satisfaction when you eat more candies?”
The outline of the methodology is to state our own hypothesis before eating the
candies. So basically you write down what is the level of your utility every time you
eat the candies. And then we do the experiment by eating the candy one by one
and write down the level of utility for each candy.
The final result that we got is that the more candy they eat, the lesser the level of
utility is. Even some for people, it extremely decreased that it reaches level of below
zero, which means that they are not happy at all.
Background Research
Economics may appear to be the study of complicated tables and charts, statistics
and numbers, but, more specifically, it is the study of what constitutes rational human
behavior in the endeavor to fulfill needs and wants.
As an individual, for example, you face the problem of having only limited resources
with which to fulfill your wants and needs, as a result, you must make certain choices
with your money. You'll probably spend part of your money on rent, electricity and
food. Then you might use the rest to go to the movies and/or buy a new pair of
jeans. Economists are interested in the choices you make, and inquire into why, for
instance, you might choose to spend your money on a new DVD player instead of
replacing your old TV. They would want to know whether you would still buy a
carton of cigarettes if prices increased by $2 per pack. The underlying essence of
economics is trying to understand how both individuals and nations behave in
response to certain material constraints. ("Economics Basics: Introduction.")
In short, we can say that people will always have limited resources and needs and
wants. the problem is sometime we have to make a decision from many options.
That decision may not be satisfying but it is a must, for example the needs to eat.
This kind of decision always makes people to want to have more resources like
money. Therefore, towards this kind of resources we will never feel that we have
enough. This is why we need to learn economic and this is why this research is
conducted.
In economics utility is a measure of satisfaction, referring to the total satisfaction
received by a consumer from consuming a good or service. Given this measure, one
may speak meaningfully of increasing or decreasing utility, and thereby explain
economic behavior in terms of attempts to increase one's utility. Utility is often
modeled to be affected by consumption of various goods and services, possession
of wealth and spending of leisure time ("Utility").
Utility are divided into 2, which are marginal and total utility. Marginal utility is the
additional satisfaction or benefit (utility) that a consumer derives from buying an
additional unit of a commodity or service ("Marginal Utility”). Marginal utility, thus,
can also be described as difference between total utility derived from one level of
consumption and total utility derived from another level of consumption.
Meanwhile, total utility is the total satisfaction obtained from all units of a particular
commodity consumed over a period of time. Summing up total utility is the amount
of satisfaction (utility) obtained from consuming a particular quantity of a good or
service within a given time period. It is the sum of marginal utilities of each
successive unit of consumption ("Total Utility (TU) and Marginal Utility (MU) -
Difference”).
By measuring the level the utility we can see how rational someone’s decision is. The
rational economics viewpoint assumes people make rational thought out decisions
based on their own calculated best interests ("Rational Vs Irrational Economics”). In
relations between making decision with limited resources and the level of utility, we
can conclude that people wants to have more to be satisfied.
Methodology
The technique that we use to take the data is called Non-Random Sample
technique. A non-random sample technique means that the people involved in
this experiment is particularly chosen. In this case, people in my table are the
ones conducting the experiment and then we share our data with the whole
grade.
We use secondary resources while we are doing the research this academic
investigation. The purpose of using it is to help our research to be much more
detailed, objective and informative.
To start the experiment the teacher gave us a few candies but before we eat
them, we have to write our own hypothesis and predict what will happen.
Then, we eat the candy one by one and write down the level of satisfaction
for each candy. The experiment is not only done in my class but also the
whole grade. So after we have collected our data, we have to share it with the
other classes using Google Docs.
We are using this technique because it is easy to conduct and doesn’t take a
lot of time because all we need to do is just eat the candies and write down
our level of satisfaction.
But there are disadvantages when we are using this technique; it is unable to
provide a proper overview, we also only have small sampling size and this
technique also building a bias. The other disadvantages of using this technique
is the shared data is not clear because some of them are presented in graphs
that is hard to read.
Presentation and Analysis of Data
These are the datas that I used for this experiment from the whole grade 9 students:
From all these data that I have from all the students from grade 9 that involved in
this experiment, we can see clearly a really high significant level of utility when they
eat more candies. Their level of utility are going down as they eat more candies. Even
though some of them are anomalies because instead of going down, their level of
utility is going up or even doesn’t change at all.
Conclusion
After 37 datas that I got, most of their level of utility are going down when
they eat more candies. From the data that I have, 23 students’s that are
involved in this experiment, their level of utility are going down. The rest of
them are going up or doesn’t change at all.
Sally
0
2
4
6
8
Candy 1 Candy 2 Candy 3 Candy 4 Candy 5
Appendix (3 Candies)
Purcell
Amount of Candy Level of Utility
1 10
2 10
3 8
Appendix (4 Candies)
Christy
Amount of Candy Level of Utility
1 10
2 8
3 3
4 -2
Viana
Amount of Candy Level of Utility
1 10
2 9
3 9
4 8
Caroline
Amount of Candy Level of Utility
1 10
2 9
3 8
4 -3
Nathalie
Amount of Candy Level of Utility
1 -10
2 -10
3 -10
4 -10
Brandon
Amount of Candy Level of Utility
1 5
2 6
3 6
4 8
James
Amount of Candy Level of Utility
1 7
Amount of Candy Level of Utility
2 8
3 9
4 10
Appendix (5 Candies)
Gary
Amount of Candy Level of Utility
1 9
2 8
3 8
4 10
5 10
Putri
Amount of Candy Level of Utility
1 6
2 6
3 7
4 8
5 7
Joey
Amount of Candy Level of Utility
1 4
2 6
3 8
4 9
5 10
Sean
Amount of Candy Level of Utility
1 4
2 6
3 6
4 7
5 7
Cynthia
Amount of Candy Level of Utility
1 10
2 8
3 8
4 9
5 9
Woo Sik
Amount of Candy Level of Utility
1 10
2 9
3 9
4 8
5 7
Nabilla
Amount of Candy Level of Utility
1 8
2 8
3 8
4 8
5 8
Alia
Amount of Candy Level of Utility
1 8
2 8
3 6
4 5
5 3
Kim
Amount of Candy Level of Utility
1 10
2 10
3 10
4 10
5 9
Nathan
Amount of Candy Level of Utility
1 9
2 8
3 8
4 7
5 7
Adric
Amount of Candy Level of Utility
1 10
2 9
3 8
4 7
5 7
Won
Amount of Candy Level of Utility
1 10
2 9
3 7
4 6
5 4
Giovani
Amount of Candy Level of Utility
1 9
2 9
3 6
4 5
5 5
Satori
Amount of Candy Level of Utility
1 6
2 4
3 5
4 6
5 6
Andrew
Amount of Candy Level of Utility
1 8
2 6
3 5
4 5
5 5
Kelvin
Amount of Candy Level of Utility
1 8
2 8
3 8
4 3
5 0
Reyhan
Amount of Candy Level of Utility
1 6
2 5
3 4
4 3
5 2
Sally
Amount of Candy Level of Utility
1 8
2 6
3 5
4 2
5 0
Wi Sung
Amount of Candy Level of Utility
1 10
2 6
3 6
4 5
5 6
Appendix (6 Candies)
Veny
Amount of Candy Level of Utility
1 9
2 6
3 5
4 4
Amount of Candy Level of Utility
5 3
6 2
Monica
Amount of Candy Level of Utility
1 9
2 6
3 5
4 4
5 3
6 2
Elena
Amount of Candy Level of Utility
1 9
2 6
3 5
4 4
5 3
6 2
Jeremy
Amount of Candy Level of Utility
1 10
2 10
3 8
4 8
5 8
6 6
Michael
Amount of Candy Level of Utility
1 8
2 10
3 10
4 10
5 10
6 9
Andre
Amount of Candy Level of Utility
1 10
2 10
3 10
4 10
5 8
Amount of Candy Level of Utility
6 8
Geun Myo
Amount of Candy Level of Utility
1 6
2 6
3 6
4 7
5 7
6 9
William
Amount of Candy Level of Utility
1 10
2 10
3 10
4 10
5 10
6 10
Ardy
Amount of Candy Level of Utility
1 10
Amount of Candy Level of Utility
2 10
3 10
4 10
5 10
6 10
Bonnie
Amount of Candy Level of Utility
1 6
2 8
3 9
4 4
5 2
6 1
Ji Yeon
Amount of Candy Level of Utility
1 7
2 5
3 3
4 2
5 1
6 1
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