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Lecture

Consumer Behavior

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Department
Economics
Course
ECON 101
Professor
Robert Gateman
Semester
Fall

Description
Consumer Behavior 10-15-2012 If you want to see your midterm: Tuesdays 4:30-5:30 Brkx 2363 If marginal utility from consuming more of a good is zero, total utility is constant. The hypothesis of diminishing marginal utility states that the more of a commodity one is consuming, the less the additional utility obtained by an increase in its consumption. According to utility theory, a consumer will maximize total utility when goods A and B are consumed in quantities such that MUa/MUb equals the ratio of the price of A to the price of B. If Monique’s marginal utility is positive but decreases as more of a commodity is consumer, her total utility is increasing. The substitution effect refers to the change in quantity demanded that results from a change in relative prices. An increase in the absolute price of a good, other things constant, increases A change in the price of a good currently being consumed by a household, other
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