LS14 - Diminishing Marginal Utility Flashcards
1
Q
What is the income effect?
A
Assuming fixed income, as a price falls, the amount that consumers can buy increases and therefore, so does demand
2
Q
What is marginal utility?
A
The utility/satisfaction gained from consuming one extra unit of a good/service
3
Q
What is diminishing marginal utility?
A
As more units of a good/service are consumed, the marginal utility of each unit will fall
