CONSUMER CHOICE

Question 1

consumer make the most of their money
there are several goods and services that has to be chosen becausee of ___

Answer 1

budhet constraints

Question 2

complete satisfaction from a good or service

Answer 2

utility

Question 3

at are the two different approaches in measuring utility?

Answer 3

1. ordinal utility
   individuals can rank the usefulness pf various economic goods
2. cardinal utility
   quantitive measurement pf satisfaction

Question 4

unit of measurement of utility

Answer 4

utils

Question 5

sum/total satisfaction that a person can receive from the consumption of a good

Answer 5

TOTAL UTILITY TU

Question 6

additional utility gained from the consumption of one additional goof/service

Answer 6

MARGINAL UTILITY

Question 7

formula for marginal utility?

Answer 7

MU= TU2 - TU1/ QT2 - QT2

Question 8

as the consumption increases marginal utility from each additional unit declines ( marginal utility is decreasing as we increase our consumption)

Answer 8

law of diminishing marginal utility

Question 9

how to explain how a consumer decided?

Answer 9

take into consideration budget constraints and overall satisfaction

Question 10

choice between consumption of goods occur when the marginal utility per peso is the same for both goods

Answer 10

utility maximizing rule

Question 11

what is the formula for marginal utility per price?

Answer 11

MU/P= marginal utility/ price of good

Question 12

what are the three steps in choosing which combinations that will maximize your utility and budget?

Answer 12

step 1: get the combination where MU/P of good A = MU/P of good B

step 2: check wether or not these combinations fit within the budget by multiplying the quantity and price of both goods and get their total

step 3: check which combination has the highest total utility

Question 13

how a consumer makes decisions according to changes in income or price of the product as budget constraints adjust

Answer 13

changes in income and price

Question 14

what are the two types of goods?

Answer 14

1. normal good
   income or budget constraint increases consumption of goodwill increases
   Increase in demand due to increase of income
2. inferior gopd
   income or budget constraint increases consumption decrease
   When people’s income rises deman for this good drops

Question 15

what are the 2 effects that can happen if the price of a good suddenly changes

Answer 15

1. substitution effect- finding a substitute for the good
2. income effect- buying less of the goods