the consumer Flashcards

chapter2

1
Q

consumer def.

A

an individual who makes the decision whether to buy goods and services

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2
Q

what is utility

A

the amount of benefit or satisfaction derived from the consumption of a good or service

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3
Q

assumptions on consumer behavior

A

they have limited incomes,
seek maximum utility,
act rationally,
are subject to the law of diminishing marginal utility

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4
Q

Charakteristics of economic goods

A

must command a price, must provide utility,

must be transferable

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5
Q

marginal utility (MU)

A

is the addition to total utility (TU) brought about by the extra utility received by the consumption of one extra unit of a good.

the extra satisfaction a consumer gets by consuming an extra unit of the good

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6
Q

the law of diminishing marginal utility

A

states that as more units of a good are consumed , a point will be reached where marginal (extra) utility eventually begins to decline .

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7
Q

assumptions underlying the law of diminishing marginal utility

A

only after the origin,
sufficient time has not elapsed,
income doesn’t change,
no addictive goods/medicines,

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8
Q

what commodities do not comply with the LOMR.

A

medicine, addictive goods

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9
Q

consumer equilibrium

A

is the condition where there is no tendency for change

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10
Q

equi-marginal utility principle

A

explains the behavior of a consumer in distributing their limited income among various goods and services

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11
Q

what is an util

A

1 unit of satisfaction

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12
Q

formula of MU

A

MUx/Px = MUy/Py =……..= MUn/Pn

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13
Q

state examples of commodities which would not be considered as economic goods.

A

FRESH AIR: is plentiful in supply/not scarce, commands no price

WEEDS: provide us with no utility, command no price

BEAUTY & HEALTH: are not transferable

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