Diminishing Marginal Utility in Economics Textbooks
Many introductory microeconomics textbook authors derive the law of demand from the assumption of diminishing marginal utility. Authors of intermediate and graduate textbooks derive demand from diminishing marginal rate of substitution and ordinal preferences. These approaches are not interchangeable; diminishing marginal utility for all goods is neither a necessary nor sufficient condition for diminishing marginal rate of substitution, and the assumption of diminishing marginal utility is inconsistent with the assumption of ordinal preferences. In this article, the author argues that demand curves should not be derived from diminishing marginal utility in introductory textbooks and suggests that introductory text authors begin their treatment of demand with diminishing marginal value.
Volume (Year): 36 (2005)
Issue (Month): 4 (October)
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