* The utility is a very subjective concept. The utility you get from a specific item, service, or activity is determined by your consuming tastes and preferences. Some things are quite enticing to you, while others are not. You might not comprehend why someone would pay big money for shark fin soup, calf brains, polka music, or martial arts movies, for example.
* Economists can talk about the origins of tastes, but they don't pretend to be experts. Economists simply believe that tastes are fixed and generally stable; that is, various people may have different tastes, but an individual's tastes are not continuously changing. To be sure, tastes for some items vary throughout time.
* Your water experience exemplifies an economic concept: the law of declining marginal value. This rule says that all things being equal, the more of an item you eat each period, the less the gain in your total utility from more consumption—that is, the smaller the marginal value of each additional unit consumed.
* As you drink more water, the benefit you receive from each extra glass decreases. You really like the first glass, but each subsequent glass gives less and less marginal value utility. If you were compelled to drink a fifth glass, you would not like it; your marginal utility would decrease. You would feel disutility if you were negative.
  * The term "*diminishing marginal utility"* refers to the phenomenon of decreasing marginal utility
* Developing numerical utility values enables us to be more explicit about the utility of consumption. If it helps, think of these units in terms of thrills, kicks, or jollies—as in, getting your kicks from consuming.
* We may compare overall utility by assigning a numerical measure to utility.
* The value that a given consumer derives from various commodities, as well as the marginal utility that a customer derives from a variety of items.
* The customer benefits from increased consumption. As a result, we may use utility units to assess a consumer's preferences It should be noted, however, that we cannot compare utility levels across all consumers, Each individual has a unique subjective utility-scale.
* Economists believe that your goal for drinking water, like all other consumption, is to maximize your overall utility. So, how much water do you drink? You drink water if the cost of water is $0, as long as doing so improves overall utility. Every one of the first four glasses of water increases your overall usefulness. When a good is free, consumption rises so long as the marginal utility is positive Let us expand our examination to a universe of two.
* Pizza and movie rentals are examples of products. We will continue to translate your happiness from consumption to utility units.
* There is no method to enhance utility by reallocating a consumer's budget once they have reached equilibrium. Any modification reduces usefulness. But hold on, there's more: The final dollar spent on each product gives the same marginal value in equilibrium. Let's see how this pans out.

   ![Individual Demand Curves](https://s3.amazonaws.com/knowt-user-attachments/images%2F1632867904089-1632867904089.png)
* When the budget is depleted and the final dollar spent on each product produces the same marginal utility, consumer equilibrium has been reached.
* The equality for the consumer equilibrium can be calculated with the following formula:
  * MUp/Pp = MUm/ Pm
* The market demand curve is just the horizontal sum of the demand curves for all market customers. Exhibit 7 demonstrates how the demand curves for three sub sandwich buyers sum horizontally to generate market demand. You require four items at a price of $4, for example.
* Brittany wants two monthly subscriptions, but Chris wants none. The market requirement is at a cost of $4, this equates to six sandwiches. You desire six per dollar at a price of $2 per month, Brittany four, and Chris two, resulting in market demand of twelve.

\


Macroeconomics

* The utility is a very subjective concept. The utility you get from a specific item, service, or activity is determined by your consuming tastes and preferences. Some things are quite enticing to you, while others are not. You might not comprehend why someone would pay big money for shark fin soup,

Chapter 6 - Consumer Choice and Demand

Joanna Parlor

View the note Chapter 6 - Consumer Choice and Demand: The utility is a very subjective concept. The utility you get from a specific item, service, or activity is determined by your consuming tastes and preferences. Some things are quite enticing to you, while others are not. You might not comprehend...