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

2. Consumer & Producer Surplus

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

4. 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

5. Graphing Total and Marginal Utility

6. Calculating Utils

7. Measuring Total and Marginal Utility

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

10. Marginal Utility

11. Calculating Consumer Optimum
And spend all your money!

12. Decisions Regarding Utility
Firms
Households
Government