NECESSARY NOT ESSENTIAL Paradox of Value Marginal Utility

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NECESSARY

NECESSARY

NOT ESSENTIAL

NOT ESSENTIAL

Paradox of Value

Paradox of Value

Marginal Utility is the additional satisfaction a consumer gains from consuming one more unit

Marginal Utility is the additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important economic concept because economists use it to determine how much of an item a consumer will buy. Positive marginal utility is when the consumption of an additional item increases the total utility. Negative marginal utility is when the consumption of an additional item decreases the total utility.

Cost of the next best alternative use of money, time, or resources when one

Cost of the next best alternative use of money, time, or resources when one choice is made rather than the other.

Remember these! You will hear them a lot this semester!

Remember these! You will hear them a lot this semester!

Land

Land

Labor

Labor

Capital

Capital

50 Coffee Tea 50

50 Coffee Tea 50

50 Coffee n o i t c u d o r p Any in

50 Coffee n o i t c u d o r p Any in this is e c a sp u o y … t n e i c i f f s e i l ine p p u s e h t g n i k have a m t ’ n e r but a ee or tea ff Tea o c e th 50

• Efficiency

• Efficiency

50 n ctio u d o r p g y n n o A

50 n ctio u d o r p g y n n o A al e is n i l T N s thi ICIE F F E Coffee Tea 50

• Growth shifts to the right. ”

• Growth shifts to the right. ”

50 m o r Coffee f n ow a o n l a d

50 m o r Coffee f n ow a o n l a d n n s t e a e v k g e n l ! e a A a k b e a t e r m h o T can ee f f e o H e c r o M Tea 50

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