Ch 6 Consumer Behaviour - Consumer Behaviour 27/09/09 1:51...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Consumer Behaviour 27/09/09 1:51 PM 23:14 Learning Objectives: The difference between marginal and total utility: Marginal utility is the additional satisfaction obtained from the consumption of each additional item. As more items are consumed, the law of diminishing marginal utility states that the marginal utility for each additional item decreases. Total utility is the sum of all marginal utilities for all items consumed. It is the total satisfaction received from the consumption of all goods. Utility-maximization Consumers adjust their expenditures so that the marginal utility per dollar spent is equal for all products. Mux = Muy Mux = Px Px Py Muy Py Effects on price change Substitution effect is the change in quantity demanded due to a change in relative prices, holding real income constant. Substitution effect is always negative because as prices, holding real income constant....
View Full Document

This note was uploaded on 10/19/2011 for the course ECON 101/102 taught by Professor Gateman&neary during the Spring '09 term at The University of British Columbia.

Page1 / 5

Ch 6 Consumer Behaviour - Consumer Behaviour 27/09/09 1:51...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online