The law of demand versus diminishing marginal utility
AbstractDiminishing marginal utility is neither necessary nor sufficient for downward sloping demand. Yet upper-division undergraduate and beginning graduate students often presume otherwise. This paper provides two simple counter examples that can be used to help students understand that the Law of Demand does not depend on diminishing marginal utility. The examples are accompanied with the geometry and basic mathematicsof the utility functions and the implied ordinary/Marshallian demands.
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Bibliographic InfoPaper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 0959.
Length: 19 pages
Date of creation: 2005
Date of revision:
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Postal: University of California, Giannini Foundation of Agricultural Economics Library, 248 Giannini Hall #3310, Berkeley CA 94720-3310
Other versions of this item:
- Bruce R. Beattie & Jeffrey T. LaFrance, 2006. "The Law of Demand versus Diminishing Marginal Utility," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(2), pages 263-271.
- Beattie, Bruce R. & LaFrance, Jeffrey T., 2006. "The Law of Demand Versus Diminishing Marginal Utility," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2ks565h0, Department of Agricultural & Resource Economics, UC Berkeley.
- Beattie, Bruce R. & LaFrance, Jeffrey T., 2005. "The law of demand versus diminishing marginal utility," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0dv2v8xx, Department of Agricultural & Resource Economics, UC Berkeley.
- Bettie, Bruce R. & Lafrance, Jeffrey T., 2006. "The law of demand versus diminishing marginal utility," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9c73m45q, Department of Agricultural & Resource Economics, UC Berkeley.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Cicchetti, Charles J & Fisher, Anthony C & Smith, V Kerry, 1976. "An Econometric Evaluation of a Generalized Consumer Surplus Measure: The Mineral King Controversy," Econometrica, Econometric Society, vol. 44(6), pages 1259-76, November.
- Arjan Ruijs, 2009. "Welfare and Distribution Effects of Water Pricing Policies," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(2), pages 161-182, June.
- Arjan Ruijs, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Working Papers 2007.92, Fondazione Eni Enrico Mattei.
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