Consumer and Producer Surplus Flashcards

1
Q

Diminishing marginal utility

A

As you consume more of a good, the marginal utility from each extra unit will decrease.

E.g. as you eat more cupcakes, the marginal benefit of the next cupcake goes down each time as you become less hungry

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2
Q

Marginal utility

A

The additional benefit received from consuming an extra unit of a good.

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