Diminishing Marginal Utility & Misc (L14) Flashcards
1
Q
Income effect
A
Assuming fixed level of income, as price falls demand increases
2
Q
Marginal utility
A
Satisfaction from consuming an extra unit of a good or service
3
Q
Diminishing marginal utility
A
As more units of the good are consumed, the marginal utility gained from each unit will fall
4
Q
Tax revenue (formula)
A
Tax rate x quantity sold
5
Q
Government spending formula
A
Subsidy rate x quantity sold
