Microeconomics: Chapter 5 08/10/2007 13:46:00 ← The law of Demand: • People do less of what they want to do as the cost of doing it rises. • The cost of an activity, good, or service involves not just monetary costs, but non-monetary costs as well. o Time, effort, etc. ← ← Utility represents the satisfaction that people derive from consumption activities. ← ← The rational utility maximizer: • Utility increases with consumption • Beyond some point, the additional utility from extra consumption DECLINES.
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