Lesson 4

• Utility

  -In economics, utility refers to the satisfaction, wellbeing, or value that an individual derives from consuming goods and services.-It is only a theoretical construct to help economist understand and model human behaviour.

  -The idea of utility is central to the field of microeconomics
• Marginal utility

  -Marginal utility refers to the additional satisfaction or utility gained from consuming one more unit of a good or service.

  -The diminishing marginal utility supports a downward sloping demand curve. 
• Demand

  The quantity that purchasers are willing and able to buy at a given price in each time period

  Has an inverse relationship between price and quantity

  A fall in market price causes an extension in demand

  A rise in market price causes a contraction in demand 
• Derived demand - is the demand for a factor of production that is used to produce another good or service.

  Joint demand - When the demand for one product is directly and positively related to market demand for a related good and service

  Composite demand - When goods have more than one use