Marginal utility
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Marginal utility

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    Marginal utility Marginal utility Presentation Transcript

    • Marginal Utility Economics 1
    • What is it?!
      • Basically….the more of a good we buy, the less satisfying it gets over time!
      • This is why we like “variety”…We get bored if we get the same thing over and over.
      • However…some things can be “necessary” items and we need them, but do not get satisfaction from buying them!
    • How does this fit with supply?!
      • Companies are always producing new products to stimulated consumer interest.
      • People get bored with buying the same things=Develop new products, labels, advertisements, incentives, additions, etc.
    • Law of Diminishing Marginal Utility
      • The more we buy of a good, the less satisfying the consumption becomes over time.
      • Our demand for the product decreases over time.
    • How Does this Compare to Price?!
      • When we experience diminishing marginal utility, we will want to pay a lower price for the good.
      • We cannot justify the higher price.