ECN 104 Lecture Notes - Lecture 9: Utility, Marginal Utility
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Nov 1st
Introductory Microeconomics Lecture
Chapter 10 – The Rational Consumer
The utility and consumption –
• The utility of a consumer is a measure of the satisfaction the consumer derives from the
consumption of goods and services
• A idiidual’s consumption bundle is the collection of all the goods and services
consumer by that individual
• A idiidual’s utility function gives the total utility generates by his or her consumption
bundle
• The unit of unity is util
Cassie’s Total Utility ad Margial Utility –
• Cassie’s total utility depeds o her
consumption of wings
• It increases until it reaches its
maximum utility level of 64 utils at 8
wings consumed and decreases after
that
• The marginal utility curve slopes
downward due to diminishing marginal
utility; each additional wing gives Cassie
less utility than the previous clam
• Note that the 9th ig is too uch
The Principle of Diminishing Marginal Utility –
The marginal utility of a good or service is the change in total utility generates by consuming
one additional unit of that good or service
The marginal utility curve shows how marginal utility depends on the quantity of a good or
service consumed
The principle of diminishing marginal utility says that each successive unit of good or service
consumed adds less to total utility than the pervious unit
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