Chapter21

Chapter21 - 9/11/2007 ECONOMICS 101 CHAPTER 21 I )...

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9/11/2007 E CONOMICS 101 C HAPTER 21 I) Commodities and Services commodities - produced goods that can be owned - ex: cowboy boots, garden hoses services - intangible goods - ex: tuition, medical care, TV broadcasts all goods are ultimately reduced to services - every economic activity has value only to the extent that it generates useful services I I) Utility Utilitarianism: the idea that the pleasure or pain from any activity respectively adds or detracts from a person’s utility, or satisfaction marginal utility - the gain in satisfaction derived through the consumption of one additional unit of good The Law of Diminishing Marginal Utility - the marginal utility from consuming equal units of a good eventually declines as the amount consumed increases I I I) Consumer Equilibrium and Demand maximizing utility
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9/11/2007 - people adjust their spending patterns whenever relative prices and marginal utilities are not in balance balancing marginal utilities - the principle of equal marginal utilities per dollar:
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Chapter21 - 9/11/2007 ECONOMICS 101 CHAPTER 21 I )...

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