The law of demand versus diminishing marginal utility
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 diminishing marginal utility. The examples are accompanied with the geometry and basic mathematics of the utility functions and the implied ordinary/Marshallian demands.
(This abstract was borrowed from another version of this item.)
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: 207 Giannini Hall #3310, Berkeley, CA 94720-3310|
Phone: (510) 642-3345
Fax: (510) 643-8911
Web page: http://areweb.berkeley.edu/library/Main/CUDARE
More information through EDIRC
|Order Information:|| Postal: University of California, Giannini Foundation of Agricultural Economics Library, 248 Giannini Hall #3310, Berkeley CA 94720-3310|
References listed on IDEAS
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.:
- Burt, Oscar R & Brewer, Durward, 1971. "Estimation of Net Social Benefits from Outdoor Recreation," Econometrica, Econometric Society, vol. 39(5), pages 813-27, September.
- LaFrance, Jeffrey T., 1985. "Linear demand functions in theory and practice," Journal of Economic Theory, Elsevier, vol. 37(1), pages 147-166, October.
- Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-76, September.
- Jeffrey T. LaFrance & Harry de Gorter, 1985.
"Regulation in a Dynamic Market: The U.S. Dairy Industry,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 67(4), pages 821-832.
- Jeffrey T. LaFrance & Harry D. Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," Monash Economics Working Papers archive-34, Monash University, Department of Economics.
- 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.
When requesting a correction, please mention this item's handle: RePEc:are:cudare:0959. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jeff Cole)
If references are entirely missing, you can add them using this form.