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The Law of Demand versus Diminishing Marginal Utility

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  • Bruce R. Beattie
  • Jeffrey T. LaFrance

Abstract

Diminishing marginal utility (DMU) 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 DMU. The examples are accompanied with the geometry and basic mathematics of the utility functions and the implied ordinary/Marshallian demands. Copyright 2006, Oxford University Press.

Suggested Citation

  • 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.
    • Handle: RePEc:oup:revage:v:28:y:2006:i:2:p:263-271
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    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2006.00286.x
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    Cited by:

    1. František Zapletal, 2022. "Revised PROMETHEE algorithm with reference values," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(2), pages 521-545, June.
    2. Arjan Ruijs, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Working Papers 2007.92, Fondazione Eni Enrico Mattei.
    3. Arjan Ruijs, 2009. "Welfare and Distribution Effects of Water Pricing Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 161-182, June.
    4. Ruijs, Arjan, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Natural Resources Management Working Papers 7441, Fondazione Eni Enrico Mattei (FEEM).

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