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Chapter 8 - Utility and Demand.docx

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ECON 101
Corey Van De Waal

Chapter 8 Utility and Demand Consumption Choices Consumer choices are influenced byConsumption possibilities are things that you can afford to buy o Limited by incomebounded by a consumers budget line which shows the limits of her consumption possibilitiesPreferences are the consumers likes and dislikes o Utility is the benefit or satisfaction from the consumption of a goodservice o Total Utility is the total benefit a person gets from the consumption of goodsgenerally more consumption gives more total utility Maximizing Utility Marginal utility of a good is the change into total utility that results from a unitincrease in the quantity of the good consumedquantity consumed of a good increases marginal utility decreases which is the diminishing marginal utility principle Utility MaximizingKey assumption is that the household chooses the consumption possibility that maximizes total utilityA spreadsheet solution is a table in a spreadsheet and calculations o Find the justaffordable combinations s
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