Chapter 21 Terms 102 - Consumer Choice Theory: Economists...

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Consumer Choice Theory: Economists continued to assume that consumers behave as if they are rational because such an assumption allows the development of testable hypothesis concerning how consumers respond to changes in prices, incomes, and other factors. The predictions from these hypothesis are by and large supported by the actual choice that the consumers make. Utility: A term that economists use for satisfaction or want satisfying power of a good or service. It is common to all goods that are desired. The concept is purely subjective; there is no way to measure the amount of satisfaction that a consumer might be able to obtain from a particular good. The satisfaction that individuals receive from consuming a good depends on their tastes and preferences. Utility Analysis: The analysis of consumer decision making based on utility maximization – making choices with the aim of attaining the highest feasible satisfaction. Total utility:
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Chapter 21 Terms 102 - Consumer Choice Theory: Economists...

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