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MICROECONOMICS, McConnell, 18ed., CHAPTER 7

MICROECONOMICS, McConnell, 18ed., CHAPTER 7

By dlab_eworley9, Sep 2010

Subjects: budget change changes curve curves demand diminishing effects ew indifference law lines marginal maximize price ratio substitution utility utility-maximization utility-to-price

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Law of Diminishing Marginal Utility	The principle that as a consumer increases the consumption of a good or service, the marginal utility obtained from each additional unit of the good or service decreases.
Utility	The satisfaction or pleasure a consumer obtains from the consumption of a good or service.
3 Characteristics of Utility	1. "Utility" and "usefulness" are not synonymous. 2. Utility is subjective. 3. Utility is difficult to quantify.
Total Utility	The total amount of satisfaction derived from the consumption of a single product or a combination of products.
Marginal Utility	The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed.