6.1 Marginal Utility and Consumer

Choice

Consumers make all kinds of decisions—they choose to drink coffee or
tea, to go to a movie, to go out for dinner, to buy mobile devices, and to
purchase houses and condos. As we discussed in Chapter 1 , economists
assume that in making their choices, consumers are motivated to
maximize their utility , the total satisfaction they derive from the goods
and services they consume.

Although utility cannot be measured directly, it is still a useful concept.
You know that you derive satisfaction—or utility—from eating a good
meal, listening to music, buying new shoes, or taking a walk through a
park. And even though we cannot measure your utility, we do need some
way to think about how you as a consumer make your decisions. As we
will see in this chapter, we can construct a useful theory of consumer
behaviour based on the assumption of utility maximization.

In developing our theory of consumer behaviour, we begin by
considering the consumption of a single product. It is useful to distinguish
between the consumer’s total utility , which is the full satisfaction
resulting from the consumption of that product by a consumer, and the
consumer’s marginal utility which is the additional satisfaction resulting
from consuming one more unit of that product. For example, the total

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