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utility a measure of the satisfaction received from possessing or consuming goods and services diminishing marginal utility the principle that the more of a good that one obtains in a specific period of time, the less is the additional utility yeilded by an additional unit of that good marginal utility the extra utility derived from consuming one more unit of a good or service. change in total utility/change in quantity disutility dissatisfaction total utility a measure of the total satisfaction derived from consuming a quantity of some good or service marginal utility per dollar of expenditure MU/P Equimarginal principle or consumer equilibrium to maximize utility, consumers must allocate their scarce incomes among goods in such a way as to equate the marginal utility per dollar of expedeniture on the last unit of each good purchased. MUx/Px=MUy/Py=MUz/Pz altering the price of one good or service the demand curve or schedule can be derived from consumber equilibrium by: downward the demand curves slopes... substitution effect The ____ indicates that following a decrease in the price of a good or service, an individual will purchase more of the now less expensive good and less of other goods income effect The ____ of a price change indicates that an individuals income can buy more of all goods when the price of one good declines, everything else held constant bounded rationality the understanding that perfect information is not likely to be available and that as a result people make decisions that in hindsight look irrational, but in reality are the rational results of a brain that is economizing behavioral economics the study of decision making assuming that people are rational in a broad sense irrational spending ____ is due to: overconfidence, mental accounting (where the money comes from), status quo, loss aversion and framing, familiarity, anchoring (the way the numbers look), and sunk costs (money is already lost for something like a ticket whether you go or don't go) neuroeconomics the joint study by economists and biologists that attempts to determine how the brain handles econoic decisions indifference curve a curve showing all combinations of 2 goods that the consumer is indifferent among indifferent lacking any preference budget line a line showing all the combinations of goods that can be purchased with a given level of income