The law of demand versus diminishing marginal utility
AbstractDiminishing marginal utility (DMU) is neither necessary nor sufficient for downward-sloping demand. Yet, upper-division undergraduate and beginning graduate students often presumeotherwise. This paper provides two simple counter-examples that can be used to help students understand that the Law of Demand does not depend on DMU. The examples are accompaniedwith the geometry and basic mathematics of 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 qt9c73m45q.
Date of creation: 01 Jul 2006
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Life Sciences; Social and Behavioral Sciences; consumers' demand; economic analysis; expected utility theory;
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," CUDARE Working Paper Series 0959, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- 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.
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