ECON101 Lecture Notes - Lecture 9: Ceteris Paribus, Demand Curve

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Gordon Lee

Document Summary

If a consumer refers bundle x to bundle y and prefers bundle y to bundle z, then the consumer must prefer bundle x to bundle z. Assumption 3: nonsatiation: ceteris paribus (all things are constant= you always want more), more of a commodity is preferred than less of it. Utility: the satisfaction, happiness, or need fulfillment that consumers receive from the goods and services they consume. Marginal utility: the change in utility that results from incremental change in consumption of a good or service. The law of diminishing marginal utility: the greater is the amount consumed of a good or service, the smaller is the increase in utility from an incremental increase in the consumption of that good. The consumers objective: the (cid:272)o(cid:374)su(cid:373)er"s o(cid:271)je(cid:272)tive is to (cid:373)a(cid:454)i(cid:373)ize her/his utilit(cid:455) giver his/her level of i(cid:374)(cid:272)o(cid:373)e. [that is, you want to spend your money so that you are as happy as possible. ]