Econ 202 1nd Edition Lecture 11 Outline of Last Lecture II Module 18 Decision Making III Implicit and Explicit Costs Outline of Current Lecture IV Maximizing Utility Module 20 Current Lecture Exam Next Monday Modules 8 9 10 13 14 18 20 30 Multiple Choice and 1 Short Answer there will be a Midpoint Formula Question bring calculator to the exam Maximizing Utility Utility measured the satisfaction that consumers get More is better in terms of measuring satisfaction More of an abstract concept Utility is production from the consumer standpoint Production Inputs Output The Inputs the goods that you buy The Outputs the satisfaction or measure of enjoyment Measure Satisfaction using the term Utils Example Pizza These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Marginal Utility The change in Total Utility Change in Quantity When Marginal Utility goes negative its at the peak of total utility Marginal Utility can be decreasing even when Total Utility is still increasing Total Utility and Marginal Utility Q the same points Optimal Consumption never consume once marginal utility curve goes negative because you are making yourself worse off at that particular point Maximizing Satisfaction stay at the top of the curve before it begins to decrease Constrained by your income Marginal Utility Change in Total Utility Change in Quantity Diminishing Marginal Utility at some point you will get less and less of an increase in satisfaction The first one you are very happy while once you get to 10 your still happy but less happy than you were with the first one Budget Constraint You only have so much income to spend You have two goods to choose from Pizza and Hot Dogs You have ten dollars in income to spend Pizza costs 2 a slice and hot dogs cost 1 Possible Consumption Possibilities inside and on the curve points outside of the curve are not possible Points inside the curve are inefficient and one would not consume there