ECON101 Lecture Notes - Lecture 6: Substitute Good, Inferior Good, Marginalism
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ECON101 Full Course Notes
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Document Summary
Module 06: markets & consumers preferences and choice. Consumer choice is influenced by: consumption possibilities, preferences. Consumption possibilities = all the goods and services that a consumer can afford to buy. Preferences = an individual"s likes or dislikes and the intensity of those feelings: the purchasing choice a consumer makes depends on his/her preferences. Indifference curve = a line of combinations of goods and services which a consumer is indifferent: the consumer realizes the same level of satisfaction or utility on any point along a particular indifference curve. She will be happy on both point c and g, she is indifferent. The magnitude of the slope of the indifference curve at any point measures the marginal rate of substitution (mrs) between the two good or services. The general tendency for a consumer to be willing to give up less of a good or service y to get on more unit of a good or service x.