Consumer behaviour (Micro) Flashcards
Not the same as behavioural economics (exactly)
1
Q
What is the assumption made about consumers?
A
They are rational, and as such aim to maximise utility.
2
Q
What is marginal utility?
A
The satisfaction gained from consuming an additional unit of good/service.
3
Q
What is diminishing marginal utility?
A
The idea that as consumers consume more of a good, the additional satisfaction falls.
4
Q
At what point is marginal utility maximised?
A
When the marginal utility = 0.
5
Q
Why might there be imperfect information?
A
-Limited information.
-Presented to exclude
-Costs in acquiring information
6
Q
What is asymmetric information?
A
When one economic agent knows more than another, power over market transaction (Lemons).
