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