Utility Flashcards
Basic economic problem
Unlimited wants and scarce resources
Mixed economy
Slight involvement of government
Free market
No government involvement
Planned
Government decided
Opportunity cost
What will be lost if the next best option is chosen
Utility
Satisfaction derived from using a product
Marginal
Additional, if have an extra bite
Marginal utility
Change in satisfaction from consuming an extra unit
Diminishing marginal utility
As the amount consumed of a commodity increases the utility derived by the consumer from the additional units goes on decreases
Total utility
The total satisfaction from a given level of consumption
How do you get total utility
Zero marginal utility, if continue to consume satisfaction will be negative
Ceteris paribus
Everything remains equal
