Utility and consumer

Question 1

Utility

Answer 1

The satisfaction a consumer gets from consuming a good or a service. Measured in Utils

Question 2

Total utility

Answer 2

The satisfaction a consumer gets from consuming several different goods

Question 3

Marginal utility

Answer 3

Extra satisfaction a consumer gets from consuming an extra unit of the good

Question 4

The law of diminishing marginal utility

Answer 4

States that as extra units of a good are consumed , the marginal utility of extra units of the good falls

Question 5

Equi mariginal principle

Answer 5

Consumer meat spend their income in such a way that’s the ratio of marginal utility to price is the same for all goods and services which they buy

Question 6

Assumptions to the law of diminishing marginal utility

Answer 6

1.Law applies only after a certain minimum amount is consumed e.g a can of cola after just a sip
2. Assume that consumers tastes stay the same, thus utility remains the same
3.assumed that consumers income remain the same, which might affect consumer patterns