Module 5: Consumer Demand and Utility

Why this module matters

It helps learners connect Module 5: Consumer Demand and Utility to the broader course path in Principles of Microeconomics — Part 3: Elasticity & Consumer Demand. Learners build working familiarity with Utility, Marginal utility, and Law of diminishing marginal utility. The lessons stay grounded in concrete examples and explanations tied to this module's core topics. Learners can check understanding through 21 quiz….

What this module covers

• Utility
• Marginal utility
• Law of diminishing marginal utility
• The supply and demand model is quite useful, especially when we also use the concept of elasticity.
• Yes, some things are thought to have increasing marginal utility.
• Explain the concept of elasticity.

Topical takeaways

• The supply and demand model is quite useful, especially when we also use the concept of elasticity.
• Yes, some things are thought to have increasing marginal utility.
• The demand curve we have been using is a summary of the choices of individual consumers.
• She's always going up here, more movies are making her happier and happier, and that's because movies are good things.
• The first place we have marginal utility is when we change consumptions from zero to one, her utility rose by 50 units.
• 29, this is the change in utility as she consumes one more, she goes from four to five, her utility goes up by 25.

Lesson arc

1. Module 5 Overview: Consumer Demand and Utility (10 min)

   The supply and demand model is quite useful, especially when we also use the concept of elasticity.

   • The supply and demand model is quite useful, especially when we also use the concept of elasticity.
   • Yes, some things are thought to have increasing marginal utility.
   • The demand curve we have been using is a summary of the choices of individual consumers.
2. Video 1: Here's the worksheet that I posted, and it's got a lot going on (6 min)

   She's always going up here, more movies are making her happier and happier, and that's because movies are good things.

   • She's always going up here, more movies are making her happier and happier, and that's because movies are good things.
   • The first place we have marginal utility is when we change consumptions from zero to one, her utility rose by 50 units.
   • 29, this is the change in utility as she consumes one more, she goes from four to five, her utility goes up by 25.
3. Video 2: in order to develop Lisa's demand for movies, we need to create a (5 min)

   I mean within Lisa we can compare you know her utility for one soda is 75 and that's higher than a utility for one movie which is 15.

   • I mean within Lisa we can compare you know her utility for one soda is 75 and that's higher than a utility for one movie which is 15.
   • And that is we just figure out what combinations are possible with these prices and this budget, and then which one gives the highest utility.
   • Video 2: in order to develop Lisa's demand for movies, we need to create a.
4. Video 3: picking right up where we left, methods two and three, we're going to (5 min)

   All right, so those are our margin utility per dollar given these prices for Lisa and her utility.

   • All right, so those are our margin utility per dollar given these prices for Lisa and her utility.
   • And now method two is to go step by step, spend the budget, and always choose the good that gives the highest margin utility per dollar.
   • We have to look at margin utility per dollar with the amount of money that we have to spend what is going to get us the highest utility.
5. Video 8: Here's some practice problems on individual demand (6 min)

   So for popcorn, the price is $1, we divide these numbers by $1, I could write 'em down again.

   • So for popcorn, the price is $1, we divide these numbers by $1, I could write 'em down again.
   • So our quantity of popcorn is two, quantity of candy is four, same as what we saw with method one.
   • There's other good combinations here too, like 12 and 12, that just costs too much, she can't afford that, or eight and eight other combinations with marginal utility per dollar equal.

Key concepts

• Utility
• Marginal utility
• Law of diminishing marginal utility
• Equimarginal principle
• Budget constraint

Practice and assessment

Learners reinforce this module through 21 quiz questions and a supporting glossary covering 5 key terms, with practice centered on The supply and demand model is quite useful, especially when we also use the concept of elasticity.

Concept glossary

Utility

The satisfaction or well-being a consumer derives from consuming goods and services.

Marginal utility

The additional utility gained from consuming one more unit of a good.

Law of diminishing marginal utility

The observation that as consumption of a good rises, each additional unit tends to yield less additional satisfaction.

Equimarginal principle

A consumer maximizes utility when the marginal utility per dollar spent is equalized across all goods.

Budget constraint

The limit on consumption imposed by income and prices.

Continue to the full course

Principles of Microeconomics — Part 3: Elasticity & Consumer Demand is the parent course for this module. Use the full course page for pricing, certificate details, and the full curriculum.