ECON 200 MIDTERM 2 (Ch. 10 – Utility, Diminishing Marginal Utility (Benefit), Deriving Demand Curve, Social Influences on Decision Making)

The enjoyment or satisfaction someone gets from consuming a good or service

No

The change in utility a person receives from consuming one additional unit of a good or service

Principle that consumers experience diminishing additional utility as they consume more of a good or service over a period of time

optimal decisions are made at the margin.

Limited amount of income available to consumers to purchase goods and services

Consumers maximize utility by equalizing the marginal utility per dollar spent across all goods and services. This means that a consumer should spend their income so that the last dollar spent on each product gives them the same marginal utility.

Holding all other factors constant, change in quantity demanded that results from the effect of change in price on one's purchasing power

Change in quantity demanded that results from the effect of change a change in price making a good more or less expensive relative to other goods, holding constant the effect of a price change on purchasing power

As the price decreases, the ratio of marginal utility per dollar increases, leading consumers to buy (demand) more of that good.

A situation in which the usefulness of a product increases with the number of consumers who use it

The tendency of people to be unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay if they didn't already own the good