MUw MUa MUw MUd Quantity of water Quantity of diamonds The shaded areas in the diagram above provide a measure of the total utility associated with the consumption of water and diamonds.Note that the total utility from water is very high(since a large volume of water is consumed) while the total utility received from diamonds is relatively low(because few diamonds are consumed). Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 04-11 The shaded areas in the diagram above provide a measure of the total utility associated with the consumption of water and diamonds. Note that the total utility from water is very high (since a large volume of water is consumed) while the total utility received from diamonds is relatively low (because few diamonds are consumed)
MUw MUa MUw MUd Quantity of water Quantity of diamonds Value in use total utility Value in exchange is related to the marginal utility derived from a good. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 04-12 Value in use = total utility Value in exchange is related to the marginal utility derived from a good
04-13 0 ④ 3.2 Consumer Preferences Three Basic Assumptions 1)Preferences are complete. 2)Preferences are transitive. 3) Consumers always prefer more of any good to less. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 04-13 3.2 Consumer Preferences • Three Basic Assumptions 1) Preferences are complete. 2) Preferences are transitive. 3) Consumers always prefer more of any good to less
1907 04-14 Consumer Preferences Indifference curves represent all combinations of market baskets that provide the same level of satisfaction to a person. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 04-14 Consumer Preferences • Indifference curves represent all combinations of market baskets that provide the same level of satisfaction to a person
04-15 0 Consumer Preferences Clothing, Combination B,A,&D (units per week) yield the same satisfaction 50 .E is preferred to U, .U,is preferred to H&G H 40 30 20 10 Food 10 20 30 40 (units per week) Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 04-15 U1 Combination B,A, & D yield the same satisfaction •E is preferred to U1 •U1 is preferred to H & G Consumer Preferences Food (units per week) 10 20 30 40 10 20 30 40 Clothing (units per week) 50 G D A E H B