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Unformatted text preview: If marg. <avg., avg. Deeper look at consumer demand o How do buyers decide how many units to buy? Marginally At each step, you compare marginal benefit with marginal cost What is marg. Benefit of buying and consuming one extra unit? marginal utility We measure MU in $ of willingness to pay MU of one extra unit is max. amt. willing to pay to receive that unit Assume diminishing marginal utility # movies per month marg. Utility (max w.t.p. this movie) total U. (max w.t.p. for all)-1 $15 $15 2 9 24 6 1 37 MU =TU/ Q TU= MU Compare MB (buyer) w. MC(cost) here, MV(value) Assume individual consumer has no control over price Take price as given...
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This note was uploaded on 04/19/2011 for the course EC 201 taught by Professor Ballard during the Fall '08 term at University of Michigan.
- Fall '08