Consumer Choice Demand- Willingness and Ability

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Presentation transcript:

Consumer Choice Demand- Willingness and Ability Consumer Surplus- Price above what you had to spend Utility- Satisfaction gained from purchase

Consumer & Producer Surplus

Utility- want satisfying power of a good or service “Getting the most for your money” $$$$$$$$$

Important Vocabulary Utility Analysis Util Total Utility Marginal Utility= Change in total utility / change in number of units consumed Consumer Optimum Law of Diminishing Marginal Utility

Graphing Total and Marginal Utility

Calculating Utils

Measuring Total and Marginal Utility

The Diamond- Water Paradox Why does water cost less than diamonds when water is a need and diamonds are frivolous?

Marginal Utility

Calculating Consumer Optimum And spend all your money!

Decisions Regarding Utility Firms Households Government