Utility Theory and Government Interventions

Questions you should be able to answer:

What are utils?

How does total utility differ from marginal utility?

Can you illustrate total and marginal utility using graphs?

What is the paradox of value?

Applications of Supply and Demand -Class Discussion:

If markets can find equilibrium in supply and demand and allocate resources efficiently- why and how do governments intervene extensively in markets? Should governments intervene in markets?

Tools Governments Use:

Ceiling Prices

Floor Prices

Subsidies and Quotas