Economics 1021A/B Lecture Notes - Lecture 8: Normal Good, Utility, Demand Curve

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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Refers to all possible consumption allocation possibilities, when. All income is spent: consider lisa, who buys only two goods: movies and popcorn. When lisa spends all of her income on movies and popcorn she reaches the limit of her consumption possibilities. Total benefit a person gets from the consumption of goods. Generally, more consumption gives more total utility: marginal utility. 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 increases marginal utility from it decreases. This is called the principle of diminishing marginal utility: utility-maximizing choice. Key assumption: household chooses the consumption possibility that maximizes total utility. A spreadsheet solution: the direct way to find the utility-maximizing choice is to make a table in a spreadsheet and do the calculations, find the just-affordable combinations, find the total utility for each just-affordable combination. Paul dimovski: the utility-maximizing combination is the consumer"s choice.

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