Any goods are of a certain value which is the cornerstone of desire to buy it for buyers. The property of any given thing to meet the consumer needs is called usefulness.
Instruction
1. The usefulness of the material or non-material benefit which the person buys for money is his ability to meet the needs of buyers. As the market is saturated, there is also a falling of value of things, i.e. the property of usefulness is in the habit to decrease in connection with reduction of demand.
2. Distinguish the general and marginal utility. If the general usefulness is a cumulative size of all realized commodity units, then limit is additional and is equal to the relation of gain of the general usefulness to additional production volume: MV = ∆TV / ∆ Q.
3. So that to find marginal utility, it is necessary to calculate the general usefulness of additional commodity units and to divide into its quantity. This size gradually decreases while the general grows. At some point its value becomes zero that says that full saturation is reached.
4. If the producer does not stop and will continue production, then the marginal utility will become negative. The enterprise will incur losses, making the benefits which nobody will want to buy. It is difficult to foresee consumer tastes, but it is possible to predict a threshold of saturation of the benefit.
5. There is one more factor which influences the size of marginal utility besides consumer demand. It is a limited stock of certain benefits, in particular that which mean use of the rare natural resources impossible to reproduction by the person. For example, diamonds. The marginal utility of additional unit of these goods is much higher, than, say, at a bottle of sparkling water as it is more difficult to satisfy the need for it. From here the principle of formation of market price which is based not on the general usefulness, namely on limit follows.