ECON1101 Chapter Notes - Chapter 3: Demand Curve, Inferior Good, Marginal Utility
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Utility: utility denotes the satisfaction that an individual derives from consuming a given good or taking a certain action. It is measured in utils per unit of time. (must specify the time frame over which is measured. ) Marginal utility implies that the utility from consuming an extra unit of a given good decreases with the number of units that have been previously consumed. utility levels represent the marginal benefit. Quantity demanded: quantity demanded represents the quantity of a given good or service that maximizes the utility experienced by the individual consuming it. Substitution effect: the substitution effect captures the change in the quantity demanded of a given good following a change in its relative price. Price of soda cans increases, the other goods became cheaper (relative to the price of soda),thus consume more of other goods. always reduces the quantity consumed of a good following an increase in its price.