 Hi, Professor Gerald Friedman, University of Massachusetts Economics Department. He had to talk about marginal utility. Satiation and the demand for stuff. Marginal utility. First utility. Utility is the pleasure you get from things. Marginal utility is the pleasure you get from one more of the thing. The basis of neoclassical consumer theory, even neoclassical value theory, which is something else, is marginal utility and the idea that the extra pleasure you get from consuming one more of anything diminishes over as you have more. You get tired of it. Anything you get tired of. You get saved. You have had enough. Marginal utility diminishes. The first time you do it, it is just great and blows your mind. Second time is wonderful. Third time is really sweet. Fourth time is nice. The fifth time, you have a headache. Things get less exciting when you have more of them. Even sex, drugs and rock and roll. We can graph diminishing marginal utility and it will be downward sloping. The more you have, the less you get. Less pleasure you get from additional things. First dog, worth enormous amounts to you. Second dog, still good. Third dog, getting to be a bit of a nuisance. Fourth dog, you are getting to be a little tired of having to pet dogs all the time and rotate which one gets to sleep on your bed, etc. Fifth dog, sixth dog, you will pay somebody to take it away from you. First glass of wine, second, third, fourth. By the time you get your seventh glass of wine, you are ready to boff. How much do you drink? I hope not enough to be boffing. From this, you can graph diminishing marginal utility as a demand curve for whatever it is. If the first glass of wine is worth $15 to you, that is the same thing as saying you would pay $15 for the first glass. Second glass, because of diminishing marginal utility, because of satiation, you won't get as much pleasure, you won't pay as much. Third glass, even less. By the time you get to the sixth or seventh glass, you won't even be willing to pay anything for it because you get no pleasure. So you can derive a demand curve, a downward sloping demand curve from diminishing marginal utility. That's your individual downward sloping demand curve. Now, just a side note, not everything has diminishing marginal utility, and the products that don't usually will land you in rehab. For example, cocaine. Give rats unlimited access to cocaine. They will snort and snort and snort and starve to death. People are like that. There are these products where you have increasing demand, increasing marginal utility, and those become the things that they take over your lives. You consume them at the exclusion of everything else. We call these addictive substances. And they're generally illegal because they're bad for you. You start on the path consuming them, more and more. Most things aren't like that. We know that's true because most people consume a wide variety of different products because each one experiences diminishing marginal utility, so each one after a while you get tired of and you move to something else. Thank you very much and have a good day.