Flashcards in 8: Utility & Demand Deck (6)
What is a budget line? What fluctuates this line?
Line that shows the limits of her consumption possibilities, fluctuates by the consumer's budget and prices of goods/services.
What is utility? Total utility?
Utility: Benefit of satisfaction from consuming a good/service
Total utility: Total benefit a person gets from consumption of goods. Generally, more consumption = more total utility
What is marginal utility?
Increase in total utility that results from consuming one more unit of the good
More you consume = less marginal utility
What is consumer equilibrium?
Situation where the consumer allocates all of her income that maximizes total utility
What is marginal utility per dollar?
Marginal utility from a good that results from spending one more dollar on it.