Incorporating Quality-Differentiated Demand into the Undergraduate Microeconomics Core

This paper takes up the matter of quality choice in undergraduate microeconomics and is divided into two sections. The first develops a conceptual framework underlying a linear demand structure for quality-differentiated goods. The second section incorporates a quality-differentiated demand structure into a conventional undergraduate critique of market efficiency in responding to consumer choice. A competitive market is shown to produce the optimal quality mix of a quality-differentiated good, while a monopolist is biased in favor of higher quality and a potentially suboptimal quality mix