4.2.2 The consumer prefers more to less
A consumer will generally prefer more rather than less of a given commodity. Commodities which share this common characteristic are referred to as goods. Not all commodities are goods. For example, society prefers less pollution to more; or an indi- vidual might actively dislike broccoli and prefer no broccoli to even the smallest portion.
pleasure diminishes Commodities which share this less usual characteristic are referred to as bads.
total utility the overall satisfaction or pleasure obtained from consuming a given quantity of a particular good or combination of goods
marginal utility the change in overall satisfaction
Needless to say, goods can become bads; although I might generally like broccoli, I
will not always take extra portions. If forced to do so, the extra portion might give nega- tive utility.
4.2.3 Additional units yield decreasing utility
Total utility increases at a decreasing rate as an individual consumes additional units of a good. Marginal utility (the utility derived from the extra unit) declines. This proposi- tion is illustrated in Figure 4.1.
Diminishing marginal utility for commodity X is illustrated in Figure 4.1a. As con-
from consuming an sumption increases towards C, marginal utility declines. Additional units yield
additional unit of a
specific good. Marginal utility
diminishing satisfaction. Beyond C, commodity X becomes a bad. Further consumption
yields increasing negative utility. The corresponding cumulative level of utility (total
would be positive if utility) is shown in Figure 4.1b. The slope of the total utility function illustrates dimin-
that unit yields
positive satisfaction, and vice versa
ishing marginal utility.