ECON 1201 Chapter Notes - Chapter 10: Demand Curve, Marginal Utility, Network Effect

• School: UConn
• Department: Economics
• Course: ECON 1201
• Professor: Owen Svalestad

Document Summary

Chapter 10 additional unit of a good or service. Utility: the enjoyment or satisfaction people receive from consuming goods and services. Marginal utility (mu): the change in total utility a person receives from consuming one. Law of diminishing marginal utility: the principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time. goods and services. Budget constraint: the limited amount of income available to consumers to spend on. Optimal decisions are made at the margin. The key to making the best consumption decision is to maximize utility by following the rule of equal marginal utility per dollar spent. of a change in price on consumer purchasing power, holding all other factors constant. Income effect : the change in the quantity demanded of a good that results from the effect. When price decreases, consumer purchasing power increases. When price increases, consumer purchasing power decreases.