Lecture 3. Wants, goods and utility

Wants. Classification of wants.

Goods. Classification of goods.

Utility. The magnitude of utility. Total, average and marginal utility.

The law of diminishing marginal utility.

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The main reason of wants variety is diversity of human nature. As usual, variety of wants determined by physical, social, economic, psychological particularities of a person.

Want (need) – is state of satisfaction which person tries to maintain or state of dissatisfaction which person tries to finish. Want (need) – is necessity in particular good or service.

Wants are high changeable and have a tendency to increase. There are several causes of its classification.

Primary and secondary.

Primary – the main want for living – needs to eat, to drink, to sleep, to wear and so on. Thesewants can’t be substituted.

Secondary – needs in luxury things, jewelry,expensive cars,buildings and so on. Thesewants can be substituted.

Individual and collective.

Individual – are wants which are satisfied privately, for example washing.

Collective -are wants which are satisfied only in group of people, for example collective games, watching film in cinema, attending theatre and so on.

Economic and uneconomic.

Economic – are wants in limited goods – any commodity.

Uneconomic – are wants in unlimited goods, for example fresh air, salt water,wind and so on.

Material, social, spiritual.

Material – needs in clothing, eating, drinking, home and so on.

Social – needs in conversation, labour, social life participation and so on.

Spiritual -needs in education, culture, spiritual freedom and so on.

Variety of wants forms particular hierarchy, which received a name “Maslow pyramid” (1954). It consists from 5 levels. On the 1^st level physical needs are placed. On the 2^nd – needs in security. On the 3^rd – needs in love and friendship. On the 4^th – needs in appreciation and respect. On the 5^th – needs in self-realization.

The first 2 levels characterize person from economic side, the last 3 levels characterize person from social side.

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Good – is a thing that satisfies particular human need.

According to needs classification there is classification of goods.

Primary and secondary.

Primary – are used to satisfy primary wants:food, drinks, rest, home and so on.

Secondary – are used to satisfy secondary wants: luxury things, jewelry,expensive cars,buildings and so on.

Individual and collective.

Individual – are elements of self hygiene.

Collective – arecollective games, cinema, theatre and so on.