1 / 15

Marginal Utility & Consumer Choice:

Chapter 5. Marginal Utility & Consumer Choice:. “I’ve been rich and I’ve been poor, and believe me, it’s better being rich” --- Sophie Tucker, a 1920s night club entertainer. “Money can’t buy happiness”. Utility:. The satisfaction or enjoyment a person obtains from consuming a good.

mairi
Download Presentation

Marginal Utility & Consumer Choice:

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Chapter 5 Marginal Utility & Consumer Choice:

  2. “I’ve been rich and I’ve been poor, and believe me, it’s better being rich” --- Sophie Tucker, a 1920s night club entertainer. “Money can’t buy happiness”

  3. Utility: The satisfaction or enjoyment a person obtains from consuming a good. Util: A hypothetical unit used to measure how much utility a person obtains from consuming a good.

  4. This is the utility a person receives from consuming each individual unit. Marginal Utility: The change in total utility a person derives from consuming an additional unit of a good. Total Utility: The total number of utils a person derives from consuming a specific quantity of a good.

  5. Law of Diminishing Marginal Utility: The idea that as more of a good is consumed, the utility a person derives from each additional unit diminishes.

  6. Total and Marginal Utility

  7. Water-Diamond Paradox: How much people value a good depends upon the utils they derive from the last unit consumed.

  8. Making selection from a given budget:

  9. Making selection from a given budget:

  10. 20% Sale on Clothing:

  11. 50% Sale on Clothing:

  12. MU/P Equalization Principle:

  13. Consumer Surplus: The difference between the maximum amount a person would be willing to pay for a good or service and the amount the person actually pays.

  14. Price 10 8 6 3 D 1 2 3 Quantity

  15. Price 3 D Quantity

More Related