ECN 102 Lecture 7: ECON TEST 2
Document Summary
Econ test 2: ch. 8, 9, 10. 1, 11 and 12. Consumption choices: choices you make as a buyer of goods and services is influenced by many factors: consumption possibilities: are all the things that you can afford to buy. You can afford many different combinations of goods and services, but they are all limited by your income and by the prices you must pay: budget line shows the limits of her consumption possibilities. More consumption generally give more total utility: marginal utility: from a good is the change in total utility that results from a unit-increase in the quantity of the good consumed. As the quantity consumed of a good increase, the marginal utility from it decreases. Marginal utility is positive, but diminishes as consumption increases: positive marginal utility: things that people enjoy and want more of have a positive marginal utility.
