EKN 110 - CHAPTER 3 CORRECT 100%

EKN 110 - CHAPTER 3 CORRECT
100%
Utility - ANSWERthe satisfaction or pleasure one gets from consuming a good or
service

Characteristic of utility - ANSWER1. Utility and usefulness are not the same
2. Utility is subjective
3. Cardinal and ordinal utility

marginal utility - ANSWERsatisfaction obtained from acquiring one more unit of a
product

Total utility - ANSWERthe total amount of satisfaction obtained from consumption of
a good or service

law of diminishing marginal utility - ANSWERlaw stating that the additional
satisfaction a consumer gets from purchasing one more unit of a product will
decrease with each additional unit purchased

Consumer Behavior - ANSWERHow consumers allocate their money income among
the many goods and services available for purchase

Factors that influence consumer behaviour - ANSWER1. Rational behaviour
2. Preferences
3. Budget constraint
4. Budget management
5. Prices

Rational behaviour - ANSWERa consumer who uses his money to maximise the
greatest amount of satisfaction from the product or service

Preferences - ANSWERwhat a person likes and dislikes and the utility they will get
from successive units of that product

Budget constraint - ANSWERthe limited amount of income available to consumers to
spend on goods and services

Marginal rate of substitution - ANSWERMRS

Equilibrium position - ANSWERTangent point between indifference curve and budget
line

Deriving the Demand Curve - ANSWEREquilibrium position at different price of
product

Cardinal utility approach - ANSWERMarginal utility theory