Apr 23 2012

Diminishing marginal utility

Published by at 2:46 pm under

One of the explanations for the law of demand and the downward sloping demand curve. Says that the more of any particular product consumers have, the less each additional unit is worth to them. In other words, the less scarce a particular product, the lower its value in the market. An example might be the iPhone, which when it came out was very scarce (in high demand but limited supply). Apple charged very high prices for the first iPhones. But as the product has become more widely available, each additional iPhone Apple makes is harder and harder to sell. It therefore must come out with new versions of the iPhone every year that are different from previous versions to keep demand strong.

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

Comments Off on Diminishing marginal utility

Comments are closed at this time.