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| Law of Diminishing Marginal Utility |
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Definition
| The principle that as a consumer increases the consumption of a good or service, the marginal utility obtained from each additional unit of the good or service decreases. |
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| The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service. |
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| The total amount of satisfaction derived from the consumption of a single product or a combination of products. |
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| The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed. |
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| Human behavior based on comparison of marginal costs and marginal benefits; behavior designed to maximize total utility. |
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| The limit that the size of a consumer's income (and the prices that must be paid for goods and services) imposes on the ability of that consumer to obtain goods and services. |
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| The principle that to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility. |
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| A change in the quantity demanded of a product that results from a change in the real income caused by a change in the product's price. |
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Definition
| (1) A change in the quantity demanded of a consumer good that results from a change in its relative expensiveness caused by a change in the product's price; (2) the effect of a change in the price of a resource on the quantity of the resource employed by a firm, assuming no change in its output. |
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