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-the lower price encourages the consumer to buy larger quantities of this good.
-lower prices means higher quantities demanded (and vice versa) |
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| is the reduction in QD of a good when its P increases b/c of a consumer's decreased purchasing power |
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| diminishing marginal utility |
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Definition
| is a good's ability to provide less satisfaction with each successive unit consumed |
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| is a measure of the relative levels of satisfaction that consumers get from the consumption of goods and services |
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| on unit of satisfaction, like a rating system, 1 star (1 util), 2 stars (2 utils) and so on. |
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| total amount of satisfaction derived from the consumption of a certain number of units of a good or service |
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| total utility increases with |
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| extra increment, additional unit |
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| average amount of satisfaction gained from consuming a product |
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| marginal utility tends to decline as... |
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Definition
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| law of diminishing marginal utility |
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Definition
| each successive unit of a good that is consumed generates less additional satisfaction that did the previous unit |
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Term
| in a state of consumer equilibrium... |
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Definition
| each good provides the consumer with the same level of marginal utility per dollar spent |
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| when goods are complements... |
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Definition
| the use of more units of one encourages the desire/need of additional units of the other |
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| when goods are substitutes... |
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Definition
| the more you have of one, the less you desire the other |
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| consumer equilibrium formula |
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Definition
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