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Ch 8 Econ Look Over

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Economics 1021A/B
Bruce Hammond

Achange in the prices of good changes the slope of the budget line and a change in a consumer's income shifts the budget line. Utility is the benefit that someone gets from consuming goods and services. Marginal utility = utility of current benefit / previous benefit number Aconsumer spends the entire budget because more consumption brings more utility and only those choices that exhaust income can maximize utility. Marginal utility: total utility that results from consuming one more unit of a good. Marginal utility = MARGINAL utility/price of the good equalizes marginal utility per dollar for all goods Spending all income = equalizes the marginal utility per dollar for all goods Marginal utility of the second time/price of the good eg. DVDs. DVD is $20, $60 to spend. 50 is marginal utility. 50/20 = 2.5 To find maximizing utility, find the combo that is equal for both goods When the
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