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 Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt0dv2v8xx.
Date of creation: 01 Sep 2005
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Life Sciences; Social and Behavioral Sciences; consumers' demand; economic analysis; expected utility theory;
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