BUSN 101 Lecture Notes - Lecture 2: Marginal Utility, Marginalism, Normal Good
30 Sep 2018
School
Department
Course
Professor
Document Summary
Utility: each consumer spends income in the way that yields the greatest amount of satisfaction. How we behave, not what we think. Max amount of money a consumer is willing to give up in exchange for a quantity of a good. Max amount of money a consumer is willing to pay for one more unit of the good. The more of a good a consumer has, the less marginal utility an additional unit contributes to overall satisfaction, all other things remain unchanged. Additional units of a commodity are worth less and less to a consumer in money terms. As a person acquires more of a commodity. High marginal utility but little total utility. Marginal analysis: method for calculating optimal choices. Choices that best promote the decision maker"s objective. How does a small change in a decision move things toward or away from the goal. Net total utility = total utility money paid.
