What about that good maximizes your utility

Reference no: EM133394135

Utility may be a new concept to each of you. However, it is a useful measurement system for understanding why people make the decisions that they do.

Example: You buy chocolate ice cream over all the others, because you prefer chocolate ice cream. Your belief is that chocolate ice cream is the best. If you thought cookies and cream ice cream was the best, then that is what you'd buy. However, if cookies and cream ice cream is too expensive, then you have to make a choice: a smaller size cookies and cream ice cream, or another flavor ice cream. Therefore, you are maximizing your utility on a per dollar basis. (This is the utility maximizing rule.)

For this discussion board, discuss a simple trip to the grocery store. Think of a good that you strictly prefer to other goods. (In other words, if you can afford it, what is a good that you will always buy over other goods that are like it.)

What about that good maximizes your utility?

What would happen to your preferences for this good if the price rose?

If the price of the good rises, what does that do to your ability to buy other goods?

Now, reverse it. What would happen to your preferences for this good if the price fell?

If the price of the good fell, what does that do to your ability to buy other goods?

Reference no: EM133394135

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