Term
| what is the enjoyment or satisfaction people receive from consuming goods and services? |
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Definition
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Term
| how can you measure utility? |
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Definition
| you can't , you can only maximize it : ie) gas to get to work/books for education |
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Term
| what is the change in total utility a person recevies from consuming one additional good or service? |
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Definition
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Term
| how do you measure marginal utility? |
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Definition
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Term
| what is the principle that explains how consumers experience diminishing additional satisfaction as they consume more of a good or service during a period of time |
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Definition
| law of diminishing marginal utility |
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Term
| When price decreases- how does this affect decision making in relation to income effect- with normal and inferior goods |
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Definition
causes the quantity demanded to increase if a normal good. and causes the quantity demanded to decrease if an inferior good.
IE) IF PRICE DECREASES then you have way more purchasing power so you buy more normal goods and less inferior |
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Term
| When price decreases- how does this affect decision making in relation to substitution effect? |
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Definition
| IN A PRICE DECREASE it lowers the opportunity cost of consuming the good which causes the quantity of the good demanded to increase |
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Term
| what is a situation where usefulness of a product increases with the number of consumers who use it |
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Definition
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Term
| what are the three mistakes consumers commonly make? |
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Definition
| unrealistic about their future, take into account monetary costs but ignore non monetary opportunity costs, fail to ignore sunk costs |
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Term
| what is the effect where people are unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it |
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Definition
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Term
| what is the curve that shows the combinations of consumption bundles that give the consumer the same utility? |
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Definition
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Term
| why does the indifference curve shift? |
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Definition
| due to variability of utility per consumption bundle |
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