Microeconomics Question from Walter E. Williams:Edit
The concept of marginal utility is subject to the objection that it implies a numerical measurement of total utility. How can we overcome this difficulty? Translate into terms which do not involve the cardinal measurement of utility:
 (a) The law of diminishing marginal utility.
 (b) The Pareto optimality condition that the ratio of the marginal utilities of two goods must equal for all individuals in a freeexchange economy.
AnswerEdit
 (a) Each additional unit of a good is preferred less than the previous unit, as measured by the amount of another good the individual is willing to give up to obtain it.
 (b) Pareto Optimality requires that MUx/MUy is equal for all individuals – hence every individual’s allocation is such that an additional unit of x is worth less than its cost in terms of y, and visa versa.
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