
Joshua likes donuts, jelly donuts in particular. He also likes apples, but not as much as jelly donuts. Let’s use this information as a starting point for our study of utility. Let’s also assume that the price of a jelly donut and the price of an apple are each $.50. If Joshua has just $.50 in his pocket, and had to choose between buying a jelly donut and an apple, which would he choose? Based on what you know about his tastes and preferences, you’ve probably guessed correctly—he would choose the jelly donut! In economic terms, Joshua receives higher utility from the consumption of a jelly donut than he does from an apple.
Excerpted from Basic Economic Principles: A Guide for Students by David Edward O’Connor and Christopher C. Faille. Published by Greenwood Publishing Group, Westport, Connecticut, 2000.









