Chapter
19
Theory
of
Consumer
Behavior
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
19­1
Chapter
Objectives
Marginal
utility
The
law
of
diminishing
returns
Total
utility
Maximizing
utility
The
water­diamond
paradox
Consumer
surplus
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
19­2
Utility
What
is
utility?
Utility
is
NOT
usefulness!
Utility
means
only
that
you
think
enough
of
something
to
buy
it
Utility
is
measured
by
how
much
you
are
willing
to
pay
for
something
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
19­3