Chapter 6

Chapter 6 - constant Consumer Equilibrium The condition in...

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Chapter 6 – 11/1/2007 Total utility – The total satisfaction a consumer derives from consumption; it could refer to either the total utility of consuming a particular good or the total utility from all consumption Marginal Utility – The change in total utility derived from a one unit change in consumption of a good Law of diminishing marginal utility – the more of a good a person consumes per period, the smaller the increase in total utility from consuming one more unit, other things
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Unformatted text preview: constant Consumer Equilibrium The condition in which an individual consumer budget is spent and the last dollar spent on each good yields the same marginal utility; therefore, utility is maximized Marginal valuation the dollar value of the marginal utility derived from consuming each additional unit of a good Consumer Surplus the difference between the maximum amount that a consumer is willing to pay for a given quantity of a good and what the consumer actually pays...
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