Consumer behaviour

Question 1

define rational behaviour

Answer 1

maximising ones own utility

Question 2

define marginal utility

Answer 2

the additional welfare gained from consuming one extra unit of a good

Question 3

define marginal

Answer 3

addition to the total… of an additional unit

Question 4

law of diminishing marginal utility

Answer 4

utility falls with consumption that’s the more one consumes there additional utility of each good is lower than the previous

Question 5

law of diminishing returns

Answer 5

as short term law which states that as a variable factor of production is added to a fixed factor of production both the marginal and average returns to the variable factor will begin to fall