The enjoyment or satisfaction that people receive from consuming goods and services. (most economists say that the more you consume of a good the lower the utility is from a good)
an artificial construct used to measure utility (can’t compare utils interpersonally)
the additional utility a person receives from consuming one additional unit of a good or service.
MU = ΔTotal Utility/ ΔQ
Law of Diminishing Marginal Utility
the marginal utility will decrease as the additional successive units of a good are consumed.
the quantity demanded from a change in purchasing power due to a change in the good’s price, ceteris paribus. (compares 2 goods in absolute terms)
change in quanitity demanded from a change in its own price, making the good relatively more or less expensive to others (holding constant the effect of the price change on purchasing power). (compared before and after with relative terms)
exist when the usefulness of a product increases with the number of consumers who use it.
the study of situations in which people do not act economically rational. (ignore nonmonetary opportunity costs, fail to ignore sunk costs and are overly optimistic)
people tend to value something more if they own it, than if they do not own it.
A cost that has already been paid and cannot be recovered.