IDEAS home Printed from https://ideas.repec.org/a/oup/revage/v28y2006i2p263-271.html
   My bibliography  Save this article

The Law of Demand versus Diminishing Marginal Utility

Author

Listed:
  • Bruce R. Beattie
  • Jeffrey T. LaFrance

Abstract

Diminishing marginal utility (DMU) is neither necessary nor sufficient for downward-sloping demand. Yet, upper-division undergraduate and beginning graduate students often presume otherwise. This paper provides two simple counter-examples that can be used to help students understand that the Law of Demand does not depend on DMU. The examples are accompanied with the geometry and basic mathematics of the utility functions and the implied ordinary/Marshallian demands. Copyright 2006, Oxford University Press.

Suggested Citation

  • Bruce R. Beattie & Jeffrey T. LaFrance, 2006. "The Law of Demand versus Diminishing Marginal Utility," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(2), pages 263-271.
    • Handle: RePEc:oup:revage:v:28:y:2006:i:2:p:263-271
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2006.00286.x
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cicchetti, Charles J & Fisher, Anthony C & Smith, V Kerry, 1976. "An Econometric Evaluation of a Generalized Consumer Surplus Measure: The Mineral King Controversy," Econometrica, Econometric Society, vol. 44(6), pages 1259-1276, November.
    2. von Haefen, Roger H., 2002. "A Complete Characterization Of The Linear, Log-Linear, And Semi-Log Incomplete Demand System Models," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(2), pages 1-39, December.
    3. Jeffrey T. LaFrance & Harry de Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 821-832.
    4. LaFrance, Jeffrey T., 1985. "Linear demand functions in theory and practice," Journal of Economic Theory, Elsevier, vol. 37(1), pages 147-166, October.
    5. Burt, Oscar R & Brewer, Durward, 1971. "Estimation of Net Social Benefits from Outdoor Recreation," Econometrica, Econometric Society, vol. 39(5), pages 813-827, September.
    6. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    7. Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-676, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. František Zapletal, 2022. "Revised PROMETHEE algorithm with reference values," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(2), pages 521-545, June.
    2. Arjan Ruijs, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Working Papers 2007.92, Fondazione Eni Enrico Mattei.
    3. Arjan Ruijs, 2009. "Welfare and Distribution Effects of Water Pricing Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 161-182, June.
    4. Ruijs, Arjan, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Natural Resources Management Working Papers 7441, Fondazione Eni Enrico Mattei (FEEM).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Phaneuf, Daniel J. & Smith, V. Kerry, 2006. "Recreation Demand Models," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 15, pages 671-761, Elsevier.
    2. Jeffrey T. LaFrance, 1990. "Incomplete Demand Systems And Semilogarithmic Demand Models," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 34(2), pages 118-131, August.
    3. Eldon V. Ball & Ricardo Cavazos & Jeffrey T. LaFrance & Rulon Pope & Jesse Tack, 2010. "Aggregation and Arbitrage in Joint Production," Monash Economics Working Papers archive-22, Monash University, Department of Economics.
    4. LaFrance, Jeffrey T., 2008. "The structure of US food demand," Journal of Econometrics, Elsevier, vol. 147(2), pages 336-349, December.
    5. Milon, J. Walter, 1988. "Travel Cost Methods For Estimating The Recreational Use Benefits Of Artificial Marine Habitat," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(1), pages 1-15, July.
    6. Ruijs, Arjan, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Natural Resources Management Working Papers 7441, Fondazione Eni Enrico Mattei (FEEM).
    7. Kesavan, Thulasiram, 1988. "Monte Carlo experiments of market demand theory," ISU General Staff Papers 198801010800009854, Iowa State University, Department of Economics.
    8. Hilger, James & Englin, Jeffrey, 2009. "Utility theoretic semi-logarithmic incomplete demand systems in a natural experiment: Forest fire impacts on recreational values and use," Resource and Energy Economics, Elsevier, vol. 31(4), pages 287-298, November.
    9. Gan, Li & Ju, Gaosheng & Zhu, Xi, 2015. "Nonparametric estimation of structural labor supply and exact welfare change under nonconvex piecewise-linear budget sets," Journal of Econometrics, Elsevier, vol. 188(2), pages 526-544.
    10. Hayley H. Chouinard & David E. Davis & Jeffrey T. LaFrance & Jeffrey M. Perloff, 2010. "Milk Marketing Order Winners and Losers," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 59-76.
    11. Hof, John G. & Loomis, John B., 1983. "A Recreation Optimization Model Based On The Travel Cost Method," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 8(1), pages 1-10, July.
    12. Robledo, Julio R. & Wagener, Andreas, 2007. "No spurious welfare gains from taxation: A further argument for the equivalent variation," Economics Letters, Elsevier, vol. 96(3), pages 325-330, September.
    13. Just, Richard E. & Gilligan, Daniel O., 1998. "Compensating Variation Without Apology? Willingness-To-Pay And The Failure Of Integrability," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20814, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Cameron, Trudy Ann & James, Michelle D, 1987. "Efficient Estimation Methods for "Closed-ended' Contingent Valuation Surveys," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 269-276, May.
    15. Koji Miyawaki & Yasuhiro Omori & Akira Hibiki, 2018. "A discrete/continuous choice model on a nonconvex budget set," Econometric Reviews, Taylor & Francis Journals, vol. 37(2), pages 89-113, February.
    16. Sutherland, Ronald J., 1982. "The Sensitivity Of Travel Cost Estimates Of Recreation Demand To The Functional Form And Definition Of Origin Zones," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(1), pages 1-12, July.
    17. Arjan Ruijs, 2007. "Welfare and Distribution Effects of Water Pricing Policies," Working Papers 2007.92, Fondazione Eni Enrico Mattei.
    18. Font, Antoni Riera, 2000. "Mass Tourism and the Demand for Protected Natural Areas: A Travel Cost Approach," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 97-116, January.
    19. M. Ali Khan & Edward E. Schlee, 2016. "On Lionel McKenzie's 1957 intrusion into 20th‐century demand theory," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 589-636, May.
    20. Sebastiaan Maes & Raghav Malhotra, 2023. "Robust Hicksian Welfare Analysis under Individual Heterogeneity," Papers 2303.01231, arXiv.org, revised Nov 2023.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:revage:v:28:y:2006:i:2:p:263-271. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press or Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.