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Chap005.2 - Translating Wants Into Demand What should Sarah...

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2 Chapter 5: Demand: The Benefit Side of the Market Slide 7 Translating Wants Into Demand What should Sarah do when she gets to the front of the line? Is the time spent in the line relevant to how many cones to order? Chapter 5: Demand: The Benefit Side of the Market Slide 8 Sarah’s Total Utility and Marginal Utility from Ice Cream Consumption Cone quantity Total utility Marginal utility (cones/hour) (utils/hour) (utils/cone) 0 0 1 50 2 90 3 120 4 140 5 150 6 140 50 40 30 20 10 -10 __ Chapter 5: Demand: The Benefit Side of the Market Slide 9 Sarah’s marginal utility Diminishing Marginal Utility Cones/hour Utils/cone 1 3 4.5 0 1.5 0.5 4 3.5 2.5 2 50 40 30 20 10 Chapter 5: Demand: The Benefit Side of the Market Slide 10 Translating Wants into Demand The Law of Diminishing Marginal Utility z The tendency for the additional utility
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