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CONSUMER BEHAVIOUR
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Table of Content
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DIAMOND-WATER PARADOX
Utility Theory
Utility is a measure of the satisfaction,
happiness, or benefit that results from the
consumption of a good.
A util is an artificial construct used to measure
utility.
Total utility is the total satisfaction a person
receives from consuming a particular quantity of
a good.
Marginal utility is the additional utility a person
receives from consuming an additional unit of a
particular good.
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Law of Diminishing
Marginal Utility
The marginal utility gained by consuming equal
successive units of a good will decline as the
amount consumed increases.
The total utility of something can be rising as the
marginal utility of that something is falling.
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2014 Cengage Learning. All Rights Reserved. May not be copied, scanned,
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2014 Cengage Learning. All Rights Reserved. May not be copied, scanned,
or duplicated, in whole or in part, except for use as permitted in a license
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2014 Cengage Learning. All Rights Reserved. May not be copied, scanned,
or duplicated, in whole or in part, except for use as permitted in a license
distributed with certain product , service, or otherwise on password-protected
website for classroom use
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