Economics consumer behavior

Economics consumer behavior - Economics Consumer Behavior...

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Economics Consumer Behavior and Utility Maximization March 3, 2008 The simplest theory of consumer behavior rests on the LAW OF IMINISHING MARGINAL UILITY. The principle states that added satisfaction declines s a consumer acquires additional units of a given product. \In a specific span of time over which consumers’ tastes remain unchanged, consumers can obtain as much of a particular good or service as they can afford. But the more of that product they obtain, the less they want still more of it. Each added unit provides less utility than the last unity purchased. Recall that a product has utility if it can satisfy a want. The utility of a good is the satisfaction or pleasure one gets from consuming it. Total utility is the total amount of satisfaction or pleasure a person derives from consuming some specific quantity. Marginal utility is the extra satisfaction a consumer realizes from an additional unit of that product. It is the change in total utility that results from the consumption of one
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This note was uploaded on 10/14/2008 for the course ECON 2001 taught by Professor Kephart during the Spring '08 term at Corning CC.

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Economics consumer behavior - Economics Consumer Behavior...

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