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Chapter 6 Key Concepts
Terms in this set (6)
Satisfaction derived from the consumption of a good.
Imaginary unit used to hypothetically measure the satisfaction derived from the consumption of a good.
Total satisfaction derived from the consumption fo all the goods consumed.
Extra satisfaction derived from the consumption of an extra unit of a good.
Diminishing Marginal Utility
The economic theory that as you consume more and more of the same good the extra utility you get from each additional unit of the good declines.
Utility Maximization Rule
The marginal utility of the last unit purchased of each good divided by the price should be equal. (MUa/Pa) = (MUb/Pb)
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