Consumer Choice

The process of obtaining the greatest level of overall satisfaction or happiness from consuming goods and services, subject to consumers' preferences, incomes, and prices, is knowns as:

Utility maximization

The law of diminishing marginal utility states that the:

Marginal utility associated with the consumption of a good or service becomes smaller with each extra unit that is consumed in a given time period.

Utility maximization is the process of obtaining the greatest level of:

Overall satisfaction or happiness from consuming goods and services, subject to consumers' preferences, incomes, and prices.

Consumers seek to maximize satisfaction based on:

Preferences, budget, and the prices of the goods and services purchased.

a. behave rationally b. have limited incomes c. can rank their preference d. consider prices

The four assumptions about utility maximization for consumers is

Marginal utility is the:

additional satisfaction or happiness received from the consumption of an additional unit of a good or service.

A __________ line shows the different combinations of two goods that can be purchased with a given budget and at known set of prices.

budget

Utility maximization assumes that consumers attempt to get the most utility possible out of their limited ___________

income

Diminishing marginal utility means total utility is:

increasing at a decreasing rate, as long as marginal utility is positive.

When we discuss consumer behavior, we assume that consumers do their best with the _________ they have available.

information

The additional satisfaction or happiness received form the consumption of an additional unit of a good or service is the ___________ utility of the good or service

marginal

Utility maximization implies purchasing good and services until their ________ utilities per dollar are equal.

marginal

Total utility is equal to the

sum of marginal utilities

The sum of marginal utilities equals __________ utility.

total

A subjective measure of the utility associated with consuming goods or services is a

util

By always selecting the best option after considering all benefits and costs, you will increase yout total ___________

utility