Principle 3 Flashcards
Consumer
a person who uses products and/or services, especially for personal needs
Producer
providers of goods and/or services
Goods
tangible items for use or consumption
Services
actions people perform, fulfilling a need or want of others
Marginal Utility
the gain from an increase or loss from a decrease in the consumption of a good or service
Law of diminishing utility
the more of the good the consumer already has, the lower the marginal utility provided by an extra unit of that good
Marginal cost
the cost added by producing one additional unit of a product or service
Law of diminishing returns
if most production resources are fixed, increasing the quantity of one resource will eventually lead to less and less productivity
Principle 3
Rational people think at the margin.
