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ECO101H1 Lecture Notes - Internetwork Packet Exchange, Emd Bl2, Inferior Good

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School
UTSG
Department
Economics
Course
ECO101H1
Professor
W.G.Wolfson

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ECO101H1 Full Course Notes
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ECO101H1 Full Course Notes
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Document Summary

Indifference theory- does not require satisfaction to be measurable: rating/ ranking system: maximizing utility (satisfaction, satisfaction measurable jollies , not worry about budget/ constraint. Tu= tu (x) how much of good x you have. Marginal utility (mu) extra utility from an extra unit. Diminishing marginal utility (reasonable: over a fixed period of time) Max is 6 because the marginal utility is zero. Consumer surplus- entire areas above their price and below the demand schedule. Marginal utility per dollar spent on good x = mu of last dollar spent bit on good y. If not equal, you"re nt satisfying maximize satisfaction. Rhs; if that happens, buy more lhs to reduce equality, slope of dx. Qxd negatively slope: law of diminishing marginal utility. Water: value in exchange (price) is low because marginal utility is high. Diamond: value of exchange (price) is high because marginal utility is high. Marginal utility is driving source of this one.

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Related Questions

The "law" of diminishing marginal utility implies that the (A) marginal utility of a good diminishes over time. (B) first unit of a good consumed will contribute most to the consumer's satisfaction (C) last unit of a good consumed will contribute most to the consumer's satisfaction. (D) total utility is negative. (E) total utility is constant as more units are consumed. Answer:

The satisfaction received by the consumption of goods and services is called ____________.

a. marginal utility

b. the law of diminishing marginal utility

c. All of these

d. utility

 

2) The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of A) diminishing total utility. B) the law of demand. consumer surplus. D) the paradox of value. E) diminishing marginal utility.