Monday

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 7 Topics for Further Study
Chapter 21 of 36 The Theory of Consumer Choice
Section 11 of 26
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Utility is a measure of the satisfaction or happiness a consumer receives from a bundle of goods.
A consumer prefers one bundle of goods to another if one provides more utility (satisfaction) than the other.
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Utility and indifference curves are closely related.
Because the consumer is equally happy with all points on the same indifference curve all these bundles provide the same utility.
An indifference curve can be thought of as an equal-utility curve.
The marginal utility of any good is the increase in utility, satisfaction, the consumer gets from an additional unit of that good.
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Most goods are assumed to exhibit diminishing marginal utility
· the more of the good the consumer already has
· the lower the marginal utility an extra unit of that good provides
· the less the consumer is willing to pay for that extra unit
Per Figure A, starting at point A
· when have 20 bananas, to get 6 more bananas willing to give up 4 apples
· when have 26 bananas, to get 15 more bananas, willing to give up only 1 apple
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The marginal rate of substitution between two goods depends on their marginal utilities.
If the marginal utility (additional satisfaction) of good X is twice the marginal utility of good Y then a person needs 2 units of good Y to compensate for losing 1 unit of good X.
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marginal utility of a product
seihin no genkai kōyō
製品の限界効用