Economics 1021A/B Chapter Notes - Chapter 8: Marginal Utility

53 views4 pages

indigomink981

25 Nov 2014

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

mariameelguendou and 38538 others unlocked

ECON 1021A/B Full Course Notes

Verified Note

94 documents

Document Summary

Utility the satisfaction gained from consuming a product or service. Budget line marks the boundary between combinations of goods a household can/cannot afford. Total utility benefit gained from total consumption of goods. Marginal utility extra satisfaction (utility) gained form consuming one more unit of a product or service. Maximizing utility: marginal utility per dollar spent, marginal utility gained from last unit of good, divided by its price. Consumer equilibrium situation in which a consumer has allocated all of his/her available income in a way that maximized utility. Marginal utility per dollar marginal utility from a good that results form spending one more dollar on it (marginal utility of one more unit of the good divided by price of good) Obtained when: marginal utility of a / pricea = marginal utility b. / priceb: marginal utility per dollar of both units is equal i. e. if you went to one movie, have to go to 8 games of bowling, mumovies/pricemovies >

Related Questions

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

3. Amy is shopping at a dollar store. She is currently buying 5 bracelets that cost $1 each and 4 sodas that cost $1 each. The table below indicates the marginal utility she obtains when she purchases this combination.

	Quantity	Price per Unit	MU per unit
Bracelets	5	$1	30
Sodas	4	$1	40

A consumer maximizes utility when the last dollar spent on any good generates the same satisfaction as the last dollar spent on every other good. Is this consumer maximizing her utility?

If not, should she consume more bracelets or more sodas? Explain.

Answer the following assuming that one more bracelet is purchased and one less soda is consumed:

Recall the law of diminishing marginal utility. What happens to the Marginal Utility of bracelets and the Marginal Utility of soda?

What happens to the Total Utility received?

What happens to the total dollars spent?

periwinklegoldfish217

The consumer optimum:

A. occurs when a consumer buys more of a good as a result of a relative price change.

B. the combo of goods and services that maximizes utility for the given income.

C. is the additional satisfaction derived from consuming one more unit of a good or service.

D. occurs when there is a change in purchasing power as a result of a change in the price of a good.

E. occurs when utility declines as consumption increases.

browngoat320

Economics 1021A/B Chapter Notes - Chapter 8: Marginal Utility

ECON 1021A/B Full Course Notes

Document Summary

Get access

Related Documents

Economics 1021A/B Lecture Notes - Marginal Utility, Utility, Demand Curve

Economics 1021A/B Lecture Notes - Lecture 8: Utility, Spreadsheet, Opportunity Cost

Economics 1021A/B Chapter Notes - Chapter 8-9: Demand Curve, Indifference Curve

Related Questions