Microeconomics For Dummies
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If you've ever been unable to consume a tenth bar of chocolate, you've experienced the phenomenon of diminishing marginal utility, meaning that as you consume increasing amounts of the same thing, the utility gained from each additional amount is smaller, as you add more and more.

At some point, the marginal utility can fall to zero and you desire no more of the good — it can even turn negative afterwards (yes, it's true, you can eat so much chocolate that eating any more causes displeasure rather than pleasure).

In general, economists assume that, given the choice, people prefer more goods to less. This assumption holds, up to a limit, because at some point people get satiated by their consumption of a good and don't want to consume any more of it.

However — and this is quite a big however — up to that point, the more-over-less assumption operates. Begin from the assumption that more is better.

Once you get the idea of what utility is to the economist, you can start putting together the building blocks that economists use for modelling.

About This Article

This article is from the book:

About the book authors:

Lynne Pepall, PhD, is a professor of economics at Tufts University. She has taught microeconomics at both graduate and undergraduate levels since 1987.

Peter Antonioni is a senior teaching fellow at the Department of Management Science and Innovation, University College, London, and coauthor of Economics For Dummies, 2nd UK Edition.

Manzur Rashid, PhD, is a lecturer at New College of the Humanities, where he covers second-year micro- and macroeconomics.

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