Applying the Marginal Decision Rule

Applying the Marginal Decision Rule Because consumers can be expected to spend the budget they have, utility maximization is a matter of arranging that spending to achieve the highest total utility possible. If a consumer decides to spend more on one good, he or she must spend less on another in order to satisfy the… Continue reading Applying the Marginal Decision Rule

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The Problem of Divisibility Paper

The Problem of Divisibility If we are to apply the marginal decision rule to utility maximization, goods must be divisible; that is, it must be possible to buy them in any amount. Otherwise we cannot meaningfully speak of spending $1 more or $1 less on them. Strictly speaking, however, few goods are completely divisible. Even… Continue reading The Problem of Divisibility Paper

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Changing Lanes and Raising Utility

Case in Point: Changing Lanes and Raising Utility Source: © 2010 Jupiterimages Corporation In preparation for sitting in the slow, crowded lanes for single-occupancy-vehicles, T. J. Zane used to stop at his favorite coffee kiosk to buy a $2 cup of coffee as he headed off to work on Interstate 15 in the San Diego… Continue reading Changing Lanes and Raising Utility

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From Individual to Market Demand

From Individual to Market Demand The market demand curves we studied in previous chapters are derived from individual demand curves such as the one depicted in Figure 7.2. Suppose that in addition to Ms. Andrews, there are two other consumers in the market for apples—Ellen Smith and Koy Keino. The quantities each consumes at various… Continue reading From Individual to Market Demand

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