【正文】 uture is the key factor. New Ways of Explaining Consumer Choices 169。 2020 Pearson AddisonWesley Value and Consumer Surplus The supply of water is perfectly elastic, so the quantity of water consumed is large and the consumer surplus from water is large. In contrast, the supply of diamonds in perfectly inelastic, so the price is high and the consumer surplus from diamonds is small. Predictions … 169。 2020 Pearson AddisonWesley Table shows Lisa’s justaffordable binations when she has $56 to spend. With $40 to spend, Lisa sees 6 movies and drinks 4 cases of soda a month. With $56 to spend, Lisa spends the extra $16, so she buys more of both goods. She sees 8 movies and drinks 6 cases of soda a month. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley A Rise in the Price of Soda Now suppose the price of soda rises. We know that MUS/PS falls, so before the consumer changes the quantities bought, MUS/PS MUM/PM. To restore consumer equilibrium (maximum total utility), the consumer decreases the quantity of soda consumed to drive up the MUS and increases the quantity of movies seen to drive down MUM. These changes restore MUM/PM = MUS/PS. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley A Fall in the Price of a Movie When the price of a good falls the quantity demanded of that good increases—the demand curve slopes downward. For example, if the price of a movie falls, we know that MUM/PM rises, so before the consumer changes the quantities bought, MUM/PM MUS/PS. To restore consumer equilibrium (maximum total utility), the consumer increases the movies seen to drive down the MUM and restore MUM/PM = MUS/PS. Predictions of Marginal Utility Theory 169。 2020 Pearson AddisonWesley UtilityMaximizing Choice If Lisa spends less on soda and more on movies, … MUS increases and MUM decreases. 169。 2020 Pearson AddisonWesley The marginal utility per dollar equals the marginal utility from a good divided by its price. Calling the marginal utility from movies MUM and the price of a movie PM, then the marginal utility per dollar from movies is MUM/PM . Calling the marginal utility of soda MUS and the price of soda PS , then the marginal utility per dollar from soda is MUS/PS. By paring MUM/PM and MUS/PS , we can determine whether Lisa has allocated her budget in the way that maximizes her total utility. UtilityMaximizing Choice 169。 2020 Pearson AddisonWesley Find the Total Utility for Each JustAffordable Combination When Lisa sees 1 movie and drinks 8 cases of soda a month, she gets 50 units of utility from the 1 movie and 248 units of utility from the 8 cases of soda. Her total utility is 298 units. UtilityMaximizing Choice 169。 2020 Pearson AddisonWesley Figure (a) shows Lisa’s total utility and marginal utility from soda. Total utility from soda increases as more soda is consumed. The bars along the total utility curve show the extra total utility (marginal utility) from each additional case of soda. Maximizing Utility 169。 2020 Pearson AddisonWesley Preferences The choice that Lisa makes depends on her preferences—her likes and dislikes. Her benefit or satisfaction from consuming a good or service is called utility. Total Utility Total utility is the total benefit a person gets from the consumption of goods. Generally, more consumption gives more total utility. Consumption Choice 169。 2020 Pearson AddisonWesley We’ll study the consumption possibilities of Lisa, who buys only two goods: movies and soda. A Consumer’s Budget Line Consumption possibilities are limited by ine, the price of a movie, and the price of soda. When Lisa spends all of her ine, she reaches the limits of her consumption possibilities. Lisa’s budget line shows the limits of her consumption possibilities. Consumption Choices 169。8 UTILITY AND DEMAND 169。 2020 Pearson AddisonWesley The choices you make as a buyer of goods and services is influenced by many factors, which economists summarize as ? Consumption possibilities ? Preferences Consumption Possibilities Consumption possibilities are all the things that you can afford to buy. Consumption Choices 169。 2020 Pearson AddisonWesley The budget line is a constraint on Lisa’s consumption choices. Lisa can afford any point on her budget line or inside it. Lisa cannot afford any point outside her budget line. Consumption Possibilities 169。 2020 Pearson AddisonWesley Table shows Lisa’s marginal utility schedules. Marginal utility from a good decreases as the quantity of the good increases. For example, as the number of movies seen in a month increases, marginal utility from movies decreases. Maximizing Utility 169。 2020 Pearson AddisonWesley Find JustAffordable Combinations Lisa has $40 a month to spend on movies and soda. The price of a movie is $8 and the price of soda is $4 a case. Each row of Table shows a bination of movies and soda that exhausts Lisa’s $40. UtilityMaximizing Choice 169。 2020 Pearson AddisonWesley A more natural way of finding the consumer equilibrium is to use the idea of choices made at the margin. Choosing at the Margin Having made a choice, would spending a dollar more or a dollar less on a good bring more total utililty? Marginal utility is the increase in total utility that results from consuming one more unit of the good. The marginal utility per dollar is the margin