ch 21, 22

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 below the demand curve and above the price line)
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This note was uploaded on 06/22/2008 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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

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