Term
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Definition
| All other things equal, people will purchase a smaller quantity of any good or service they want as the price rises. |
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Term
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Definition
| The sense of well-being, satisfaction, or pleasure a person gets from consuming a good or service. |
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Term
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Definition
| The additional utility gained from consuming an additional unit of a good or service. |
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Term
| Law of Diminishing Marginal Utility |
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Definition
| As consumption of a good increases beyond a point, the additional utility gained from one more unit of the good declines. |
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Term
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Definition
| To maximize utility yielded by a fixed income, spending must be allocated across goods so the marginal utility per dollar spent is the same for every good. |
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Term
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Definition
| Sensitivity of demand to price changes. |
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Term
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Definition
| The absolute price of a good in current dollar terms. |
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Term
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Definition
| The price of a good relative to other dollar prices of other goods or services, also known as the opportunity cost. |
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Term
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Definition
| A good with income elasticity greater than one, a subset of a normal good. |
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