econ100511 - Microeconomics Oct. 5th, 2011. Marginal...

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Microeconomics Oct. 5 th , 2011. Marginal Utility Why individual's demand curves are often downward sloping. The Big Picture We get pleasure from things. But we get sated and get less and less additional pleasure the more we already have. This is diminishing marginal utility Because of this, we will buy more of anything only at ever decreasing price. Individual demand curves are downward sloping. In the orthodox model, aggregate demand curves are the sum of the individual curves. This require an extreme assumption of independence of individual choice. Marginal utility diminishes because of satiation “Marginal utility” is the extra pleasure we get from consuming one more thing. Marginal → always one more thing Pleasure decreases with more It diminishes because we become “sated” - we have had enough. Marginal Utility diminishes The more you have, the less you want more Things are less exciting when you have a lot IF you had increasing marginal utility for just ONE thing, it would become your LIFE
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econ100511 - Microeconomics Oct. 5th, 2011. Marginal...

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