{"id":1139,"date":"2015-05-11T23:03:16","date_gmt":"2015-05-11T23:03:16","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterymicro1xngcxmaster\/?post_type=chapter&#038;p=1139"},"modified":"2015-07-11T05:17:14","modified_gmt":"2015-07-11T05:17:14","slug":"putting-it-together-5","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/chapter\/putting-it-together-5\/","title":{"raw":"Putting It Together: Utility","rendered":"Putting It Together: Utility"},"content":{"raw":"<h2>Summary<\/h2>\r\n[caption id=\"attachment_2070\" align=\"aligncenter\" width=\"351\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182153\/7027596629_1b17209fa6_z.jpg\"><img class=\"wp-image-2070 \" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182153\/7027596629_1b17209fa6_z.jpg\" alt=\"A clear glass jar filled with crumpled money, including some $100. On the outside of the jar is a sticker with the word &quot;Budget.&quot;\" width=\"351\" height=\"307\" \/><\/a> \"<a href=\"https:\/\/www.flickr.com\/photos\/76657755@N04\/7027596629\/in\/photolist-bH1gD8-r8gSNs-9vhaAV-92s9aT-3ddXbr-ahwGjA-a1vKe3-7C1xV5-6tNwfa-dZTGrz-9MGubr-7YyE7H-4wriVm-4wmvbk-d5Yvhj-bta3WF-bt4jZT-rLLc9R-dAt4j3-dwSojb-4wmMhP-4wqCvL-biaV9e-4Vd4j4-dhzKH3-d2ffqQ-s2NMwT-9zVRnh-65Gi1D-rpNmDu-qMVozx-mdxsud-dinM2v-djgSBw-6VWe1u-4wqW43-du8MtP-6VWdPj-dXbrCv-dhh6C5-cW3bB5-8AQsJW-7DuGEd-8eZ4Yz-4wmZav-cW1MNm-ahsfvu-8mhZ1U-9qbjJz-fgRwQF\">Budget<\/a>\" by Tax Credits, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">CC-BY.<\/a>[\/caption]\r\n\r\nThe goal of this module was to explain how consumer behavior shapes the demand curve with respect to utility and loss. You learned how to:\r\n<ul>\r\n\t<li>Define the concept of utility, and to be able to differentiate between marginal and total utility<\/li>\r\n\t<li>Explain how consumers maximize total utility within a given income or budget using the Utility Maximizing Rule<\/li>\r\n\t<li>Explain how consumer\u2019s utility changes when income or prices change<\/li>\r\n\t<li>Describe the behavioral economics approach to understanding decision-making<\/li>\r\n<\/ul>\r\n<h2>Examples<\/h2>\r\nThe key underlying principle in this module was getting the biggest bang for the buck. \u00a0This principle will be used over and over again in different contexts in this text, and\u00a0the results will sometimes surprise you.\r\n\r\nLet\u2019s return to the GPA example in the \"Why it Matters\" Feature. \u00a0To keep it simple, let us suppose you are only taking two courses, an \u201ceasy\u201d course, and a \u201chard\u201d course, where the difficulty is defined by how much time and effort it takes to earn a given grade. \u00a0Is Principles of Microeconomics an easy course or a hard one for you? \u00a0I don\u2019t know. \u00a0You can decide which of your courses falls into each category. \u00a0Many people think that it makes the most sense to spend the most time and effort on the hard course. \u00a0After all, a hard course requires more time to learn, right? \u00a0That\u2019s true, but if you think like an economist, you'll see that to maximize your GPA, given a limited amount of study time, it makes more sense to start with the course where your study time will have the most impact on your grades, the biggest bang for the buck. \u00a0In other words, you should start with the easy course and quite possibly spend more time on it, until to assure yourself of an A.\r\n\r\nThis is no different than choosing to spend more of your budget on the product that gives you the most marginal utility per dollar spent. \u00a0It both cases, you make the most of your scarce resource, budget dollars in the consumption case and study hours in the GPA case.\r\n\r\nAs you proceed through the rest of this text, look for opportunities to apply the biggest bang for the buck principle.","rendered":"<h2>Summary<\/h2>\n<div id=\"attachment_2070\" style=\"width: 361px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182153\/7027596629_1b17209fa6_z.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-2070\" class=\"wp-image-2070\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182153\/7027596629_1b17209fa6_z.jpg\" alt=\"A clear glass jar filled with crumpled money, including some $100. On the outside of the jar is a sticker with the word &quot;Budget.&quot;\" width=\"351\" height=\"307\" \/><\/a><\/p>\n<p id=\"caption-attachment-2070\" class=\"wp-caption-text\">&#8220;<a href=\"https:\/\/www.flickr.com\/photos\/76657755@N04\/7027596629\/in\/photolist-bH1gD8-r8gSNs-9vhaAV-92s9aT-3ddXbr-ahwGjA-a1vKe3-7C1xV5-6tNwfa-dZTGrz-9MGubr-7YyE7H-4wriVm-4wmvbk-d5Yvhj-bta3WF-bt4jZT-rLLc9R-dAt4j3-dwSojb-4wmMhP-4wqCvL-biaV9e-4Vd4j4-dhzKH3-d2ffqQ-s2NMwT-9zVRnh-65Gi1D-rpNmDu-qMVozx-mdxsud-dinM2v-djgSBw-6VWe1u-4wqW43-du8MtP-6VWdPj-dXbrCv-dhh6C5-cW3bB5-8AQsJW-7DuGEd-8eZ4Yz-4wmZav-cW1MNm-ahsfvu-8mhZ1U-9qbjJz-fgRwQF\">Budget<\/a>&#8221; by Tax Credits, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">CC-BY.<\/a><\/p>\n<\/div>\n<p>The goal of this module was to explain how consumer behavior shapes the demand curve with respect to utility and loss. You learned how to:<\/p>\n<ul>\n<li>Define the concept of utility, and to be able to differentiate between marginal and total utility<\/li>\n<li>Explain how consumers maximize total utility within a given income or budget using the Utility Maximizing Rule<\/li>\n<li>Explain how consumer\u2019s utility changes when income or prices change<\/li>\n<li>Describe the behavioral economics approach to understanding decision-making<\/li>\n<\/ul>\n<h2>Examples<\/h2>\n<p>The key underlying principle in this module was getting the biggest bang for the buck. \u00a0This principle will be used over and over again in different contexts in this text, and\u00a0the results will sometimes surprise you.<\/p>\n<p>Let\u2019s return to the GPA example in the &#8220;Why it Matters&#8221; Feature. \u00a0To keep it simple, let us suppose you are only taking two courses, an \u201ceasy\u201d course, and a \u201chard\u201d course, where the difficulty is defined by how much time and effort it takes to earn a given grade. \u00a0Is Principles of Microeconomics an easy course or a hard one for you? \u00a0I don\u2019t know. \u00a0You can decide which of your courses falls into each category. \u00a0Many people think that it makes the most sense to spend the most time and effort on the hard course. \u00a0After all, a hard course requires more time to learn, right? \u00a0That\u2019s true, but if you think like an economist, you&#8217;ll see that to maximize your GPA, given a limited amount of study time, it makes more sense to start with the course where your study time will have the most impact on your grades, the biggest bang for the buck. \u00a0In other words, you should start with the easy course and quite possibly spend more time on it, until to assure yourself of an A.<\/p>\n<p>This is no different than choosing to spend more of your budget on the product that gives you the most marginal utility per dollar spent. \u00a0It both cases, you make the most of your scarce resource, budget dollars in the consumption case and study hours in the GPA case.<\/p>\n<p>As you proceed through the rest of this text, look for opportunities to apply the biggest bang for the buck principle.<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-1139\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Authored by<\/strong>: Steven Greenlaw and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":969,"menu_order":19,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"\",\"author\":\"Steven Greenlaw and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"d4c52a45-0fb9-4a04-9da2-04ddf72a3267","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-1139","chapter","type-chapter","status-publish","hentry"],"part":27,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/users\/969"}],"version-history":[{"count":7,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1139\/revisions"}],"predecessor-version":[{"id":3135,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1139\/revisions\/3135"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/parts\/27"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1139\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/media?parent=1139"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapter-type?post=1139"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/contributor?post=1139"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/license?post=1139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}