Journal Article

The Law of Demand versus Diminishing Marginal Utility

Bruce R. Beattie and Jeffrey T. LaFrance

in Applied Economic Perspectives and Policy

Published on behalf of Agricultural and Applied Economics Association

Volume 28, issue 2, pages 263-271
Published in print January 2006 | ISSN: 2040-5790
Published online January 2006 | e-ISSN: 2040-5804 | DOI: https://dx.doi.org/10.1111/j.1467-9353.2006.00286.x
The Law of Demand versus Diminishing Marginal Utility

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  • Household Behaviour and Family Economics
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Diminishing marginal utility (DMU) is neither necessary nor sufficient for downward-sloping demand. Yet, upper-division undergraduate and beginning graduate students often presume otherwise. This paper provides two simple counter-examples that can be used to help students understand that the Law of Demand does not depend on DMU. The examples are accompanied with the geometry and basic mathematics of the utility functions and the implied ordinary/Marshallian demands.

Keywords: A220; A230; D110

Journal Article.  2455 words.  Illustrated.

Subjects: Household Behaviour and Family Economics ; Economic Education and Teaching of Economics

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