Individual Economic Decision Making Flashcards
What is utility
A measure of the satisfaction that we get from purchasing and consuming a good or service
What is total utility
The total satisfaction from a given level of consumption
What is marginal utility
The change in satisfaction from consuming an extra unit
What is the idea of diminishing returns
That the marginal utility of extra units decline as more as consumed
What is the paradox of value
The idea that we understand the value of things e.g. water vs diamonds
What is value in exchange
What a resource can be sold for in exchange for other products
Social factors that influence demand
Social awareness
Social norms
Social pressures
Emotional factors that influence demand
Health insurance
Personal insecurity - binge drinking
Hobbies / interests
Example of choices made by consumers being influenced by the decisions of others
Messenger apps
