AREC 202 Lecture Notes - Marginal Utility, Opportunity Cost
25 Mar 2014
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Document Summary
If money didn"t buy you happiness, you would be indifferent. As you eat more steak, you become more happy more is better . But the more you eat, the less valuable the marginal unit becomes diminishing marginal utility . Assume you have to spend (on hot dogs and hamburgers) First dollar either one, let"s say burger (20 u) Giving only total utility on a unit basis would make it more difficult. You will buy 4 hamburgers & 3 hot dogs. Fourth, fifth, and sixth dollar hamburger (20 u) (better than spending on 2 u) Seventh, eighth, and ninth dollar hamburger (10 u) Tenth dollar hot dog (2 u) (higher u per $) Eleventh, twelfth, and thirteenth dollar burger (5 u) Fourteenth, fifteenth, and sixteenth dollar burger (3 u) Seventeenth, eighteenth, and nineteenth dollar burger (2 u) Between apples and oranges (or machine guns & knives)
