econ101 ch5 part 2 notes

econ101 ch5 part 2 notes - other goods constant) utility...

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Chapter 5 How do consumers behave (make decisions)? goal: maximize “utility” (“happiness”) subject to constraints “marginal utility per dollar” spent on a good or service will play key role Law of Diminishing Marginal Utility (LDMU): the value that a consumer places on additional units of a particular good will diminish as total consumption of that good increases (holding
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Unformatted text preview: other goods constant) utility (U) level of satisfaction from consumption (measured in utils) marginal - what happens with the next unit (extra, incremental) marginal utility (MU): the change in utility derived from consuming an additional unit of a good = the amount of utility gained: MU = (change in U / change in Q)...
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