ECO100Y5 Lecture Notes - Lecture 1: Marginal Utility, Utility, Arve

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Lee Bailey

Document Summary

Utility: the satisfaction that a consumer receives from consuming some good or service total utility: the total satisfaction resulting from the consumption of a given commodity by a consumer. Marginal utility: the additional satisfaction obtained from consuming one additional unit of a commodity. Utility schedules and graphs total utility rises, but marginal utility declines, as consumption increases. Maximizing utility consumers seek to maximize their total utility subject to the constraints they face the consumer"s decision: how can consumers decide to allocate their consumption of any two goods, or any number of goods (in this case ex. Muy: basic prediction of demand theory: a rise in the price of a product (with all other determinants of demand held constant) leads each consumer to reduce the quantity demanded of the product. No matter how many consumers are involved, the process is the same; add the quantities demanded by all consumers at each price, and the result is the market demand curve.