ECON 1050 Chapter Notes - Chapter 8: Normal Good, Opportunity Cost, Prefrontal Cortex

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The choices you make as a buyer of goods and services are influenced by many factors: consumption possibilities. Consumption possibilities are all the things that you can afford to buy. Everything you can buy is limited by your income and by the prices you must pay. A budget line- marks the boundary between those combinations of goods and services that a household can afford to buy and those that it cannot afford. When prices or income change, consumption also changes, a rise in income shifts the budget line outward but leaves the slope unchanged. A change in price changes the slope of the line: preferences. A choice that she makes depending on preference- what she likes and dislikes. Utility- the benefit or the satisfaction a person gets from the consumption of goods or service. Total utility- the benefit that a person gets from the consumption of all the different goods and services.

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