Chapter Introduction

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MODULE 51

Utility Maximization

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51Utility Maximization

In this Module, you will learn to:

We have used the demand curve to study consumer responsiveness to changes in prices and discovered its usefulness in predicting how consumers will gain from the availability of goods and services in a market. But where does the demand curve come from? In other words, what lies behind the demand curve? The demand curve represents the tastes, preferences, and resulting choices of individual consumers. Its shape reflects the additional satisfaction, or utility, people receive from consuming more and more of a good or service.