Utility

Question 1

1. Utility

Answer 1

satisfaction derived from consumption

Question 2

2. marginal utility

Answer 2

the change in total utility resulting from consumption of one extra unit of a given commondity

Question 3

3. law of diminishing marginal utility

Answer 3

states that as successive equal addition (each extra one) to the quantity of a good is consumed it provides an smaller and smaller increase in total utility

Question 4

4. total utility

Answer 4

the aggregate satisfaction gained from consuming successive quantities of a good

Question 5

5. Optimum Purchase Rule

Answer 5

states that a consumer will purchase more of a good until price equals m.u

Question 6

6. Law of Equal marginal utility

Answer 6

consumer equilibrium will occur when the marginal utility of the last dollar on each commodity is equal

Question 7

7. consumer equilibrium first rule

Answer 7

1: consumer should make choices where the ratio of m.u per dollar for all goods purchased as equal

Question 8

8. consumer equilibrium second rule

Answer 8

2: they should maximise their total utility given their budget

Question 9

9. The law of diminishing marginal returns

Answer 9

that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output.