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Unformatted text preview: o Measuring Wants: The Concept of Utility Utility is the satisfaction people derive from their consumption activities Assumption is that people allocate their income to maximize their satisfaction or total utility Marginal Utility (MU) = change in total utility (TU) from one to the next MU/Price = Utils per Bucks, you want to maximize your utils per dollar, MUc/Pc = MUf/Pf MUc/MUf = Pc/Pf o If you have two individual demand curves ( like one for person A and one for person B) you add the two curves together to get the market demand curve o Consumer Surplus The difference between a buyers reservation price for a product and the price actually paid Net Benefit = TB TC...
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- Spring '08