1. Utility Concept
• Utility is not the same thing as satisfaction. Utility is the
satisfaction one expects from having a commodity. It is expectation
that guides the consumer in allocating his income to various uses.
• Utility is not internal to commodities. The seat of utility is human
mind; it is psychological feeling of satisfaction expected from the
consumption of a good.
• Utility cannot be measured in itself like time, weight or distances.
But the concept has such explanatory value that economists use
arbitrary numbers called utils for expressing utility. As a consumer
buys more and more of a commodity is total utility for him
increases but at a diminishing return.
• What it diminishes is marginal utility (MU) which is defined as the
addition to total utility of commodity when one more unit is added
to the stock of it the consumer already has.
2. Utils
Price = MU = 2
Total utility = 34
Expenses = 10
CS = 24
2
Expenses
0 5 Q
MU
Segments A B C
Unit of commodity X 1 2 3 4 5 6 7 8 9 10
Total Utility, TU (utils) 20 25 29 32 34 35 35 34 32 29
Marginal Utility, MU - 5 4 3 2 1 0 -1 -2 -3
CS
3. Utils
35 35
34 34
32 32
29
30 29
25 25
20
20
0 1 2 3 4 5 6 7 8 9 10 Qx
Positive MU Negative MU
5
4
3
2
A
1 0
B
6
-1
-2
-3
C
4. Utility and Competing Claims on Income
• Income = 100
• PA = 10, PB = 20, PC = 30
• Consumer equilibrium : (MUA/PA) = (MUB/PB) = ……..
• A, B, C…..?
Units A B C
MU MU/P MU MU/P MU MU/P
1 60 6 100 5 90 3
2 40 4 60 3 45 1.5
3 30 3 50 2.5 30 1
4 10 1 20 1 0 0
5 0 0 10 0.5 -4.5 -1.5
10. Efek Pendapatan
• Kenaikan pendapatan akan menggeser garis anggaran ke atas seperti
diperlihatkan oleh Gambar berikut. Karena harga relatif Pepsi dan pizza
tidak berubah, maka kemiringan garis anggaran yang baru sama saja
dengan kemiringan garis anggaran yang lama. Hal itu artinya kenaikan
pendapatan akan menimbulkan pergeseran garis anggaran secara sejajar.
Quantity
of Pizza
Quantity
of Pepsi
0
I1
I2
2. …raising pizza consumption…
3. …and Pepsi
consumption.
Initial
optimum
New budget constraint
1. An increase in income shifts
the budget constraint outward…
Initial
budget
constraint
New optimum
11. Efek Substitusi
• Sekarang apa yang terjadi terhadap pilihan konsumsi jika ada salah
satu barang yang harganya naik atau turun? Gambar berikut
menjelaskan efek substitusi dari turunnya harga Pepsi yang berakibat
garis kendala anggaran bergeser ke atas dengan besaran kemiringan
mengalami perubahan (lebih curam).
Quantity of Pizza100
Quantity
of Pepsi
1,000
500
0
I1
New budget constraint
3. …and
raising Pepsi
consumption.
Initial budget
constraint
2. …reducing pizza consumption…
1. A fall in the price of Pepsi
rotates the budget constraint
outward…
New optimum
I2
12. Efek Pendapatan dan Substitusi
Quantity of Pizza
Quantity
of Pepsi
0
A
Initial optimum
I1
New budget constraint
Initial
budget
constraint
I2
C New optimum
Income effect
Income effect
Substitution
effect
B
Substitution effect