EKN 110 - CHAPTER 5(RATED A+)
Utility - ANSWERsatisfaction one gets from consuming it
Total Utility (TU) - ANSWERthe total amount of satisfaction obtained from
consumption of a specific quantity of a good or service
Optimum achieved - ANSWERmoney income is allocated so that the last rand spent
on each product yields the same extra/marginal utility
Income effect - ANSWERthe impact that a change in the price of a product has on a
consumer's real income and consequently on the quantity demanded of the good
Substitution effect - ANSWERthe impact that a change in a product's price has on its
relative expensiveness and consequently on the quantity demanded
Budget line - ANSWERa schedule or curve showing various combinations of two
products a consumer can purchase with a specific money income
Rational behaviour - ANSWERconsumers try to maximize their utility with the
available income
Budget constraint - ANSWERat any point in time the consumer has a fixed, limited
amount of money income
Marginal Utility - ANSWERsatisfaction obtained from acquiring one more unit of a
product
Marginal Utility - ANSWERthe change of total utility that results from the
consumption of 1 more unit of a product
Weighed Marginal Utility - ANSWERthe per-rand value extra satisfaction ( weighted
extra satisfaction) a consumer realizes from an additional unit of that product
Utility - ANSWERsatisfaction one gets from consuming it
Total Utility (TU) - ANSWERthe total amount of satisfaction obtained from
consumption of a specific quantity of a good or service
Optimum achieved - ANSWERmoney income is allocated so that the last rand spent
on each product yields the same extra/marginal utility
Income effect - ANSWERthe impact that a change in the price of a product has on a
consumer's real income and consequently on the quantity demanded of the good
Substitution effect - ANSWERthe impact that a change in a product's price has on its
relative expensiveness and consequently on the quantity demanded
Budget line - ANSWERa schedule or curve showing various combinations of two
products a consumer can purchase with a specific money income
Rational behaviour - ANSWERconsumers try to maximize their utility with the
available income
Budget constraint - ANSWERat any point in time the consumer has a fixed, limited
amount of money income
Marginal Utility - ANSWERsatisfaction obtained from acquiring one more unit of a
product
Marginal Utility - ANSWERthe change of total utility that results from the
consumption of 1 more unit of a product
Weighed Marginal Utility - ANSWERthe per-rand value extra satisfaction ( weighted
extra satisfaction) a consumer realizes from an additional unit of that product
