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The want-satisfying power of a good or service.
There is no way that you or I can measure the amount of utility that aconsumer might be able to obtain from a particular good
The analysis of consumer decision making based on utility maximization.
A representative unit by which utility is measured.
Calculating consumer utility from each unit consumed
Utility Equilibrium Formula
It is in equilibrium when the last dollar spent on each items produces the same utility
Calculating Consumers totally Utility
The sum of all marginal utilities
The change in total utility due to a one-unit change in the quantity of a good or service consumed.
marginal means “incremental” or “additional.” (Marginal changes also refer to decreases, in which cases we talk about decremental changes.)
in economics, the term marginal always refers to a change in the total.
The overall utility of one-unit in a good or service consumed.
Marginal utility (Formula)
Diminishing marginal utility
The principle that as more of any good or service is consumed, its extra benefit declines. Otherwise stated, increases in total utility from the consumption of a good or service become smaller and smaller as more is consumed during a given time period.
A choice of a set of goods and services that maximizes the level of satisfaction for each consumer, subject to limited income.
When the consumer has attained an optimum consumption set of goods and services, we say that he or she has reached consumer optimum
The tendency of people to substitute cheaper commodities for more expensive commodities.
Principle of substitution
The principle that consumers shift away from goods and services that become priced relatively higher in favor of goods and services that are now priced relatively lower.
The value of money for buying goods and services. If your money income stays the same but the price of one good that you are buying goes up, your effective purchasing power falls, and vice versa.
The change in people’s purchasing power that occurs when, other things being constant, the price of one good that they purchase changes.When that price goes up, real income, or purchasing power, falls, and when that price goes down, real income increases.
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