ECON 208 Chapter Notes - Chapter 6: Marginal Utility, Utility, Inferior Good

• School: McGill University
• Department: Economics
• Course: ECON 208
• Professor: El- Attar Mayssun

Document Summary

Consumers are motivated to maximize their utility, the total satisfaction they derive from the goods and services they consume, when making choices. Consumer"s total utility: full satisfaction resulting from the consumption of that product by a consumer. Consumer"s marginal utility: additional satisfaction resulting from consuming one or more unit of that product. Total utility is the total satisfaction received from consuming a given total quantity of a good or service, while marginal utility is the satisfaction gained from consuming an additional quantity of a particular good or service. Law of diminishing marginal utility: utility that any consumer derives from successive units of a particular product consumed over some period of time diminishes as total consumption of the product increases (holding constant the consumption of all other product) Marginal utility is a rate of change measured over an infinitesimal interval. Utility maximizing consumer allocates expenditure so that the marginal utility obtained from the last dollar spent on each product is equal.