ECON 1050 Chapter Notes - Chapter 8: Bounded Rationality, Neuroeconomics, Marginal Utility

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Consumption choices: summarize using 2 headings: consumption possibilities: all things you can afford to buy o limited by income and prices you need to pay. Changes in consumptions possibilities: change when income/price changes rises in income shifts budget line outward but leaves slope unchanged (change in price changes slope of line: preferences: Utility the concept of marginal benefit and marginal benefit curve (demand curve) goods/services is the benefit/satisfaction that a person gets from the consumption of. Total utility: total benefit that a person gets from the consumption of all the different goods/services (depends on the level of consumption) Marginal utility: change in total utility that results from a one-unit increase in the quantity of a good consumed positive but diminishes as the quantity of a good consumed increases (subtract) Positive marginal utility - all things people enjoy and want more of (total utility increases as quantity consumed increases)

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