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ch 21, 22 - Utilitarianism idea that the pleasure or pain...

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Utilitarianism: idea that the pleasure or pain from any activity respectively adds or detracts from a person’s utility, or satisfaction Marginal utility (MU): gain in satisfaction derived through the consumption of one additional unit of a good Law of diminishing marginal utility: the marginal utility from consuming equal units of a good eventually declines as the amount consumed increases Principle of equal marginal utilities per dollar: a consumer maximizes utility when the last dollar spent on any good generates the same satisfaction as the last dollar spent on every other good. Substitution effect: portion of the change in quantity demanded due solely to a change in relative prices Income effect: the adjustment people make because the purchasing power of a given income is altered when prices change Consumer surplus: difference between the amounts people would willingly pay for various amounts of specified goods and the amounts they do pay at market prices (area
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