Consumer Choice

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Consumer Choice

• Demand- Willingness and Ability
• Consumer Surplus- Price above what you had to
  spend
• Utility- Satisfaction gained from purchase

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Utility- want satisfying power of a good or
serviceGetting the most for your
money
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Consumer Producer Surplus
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Important Vocabulary

• Utility Analysis
• Util
• Total Utility
• Marginal Utility Change in total utility /
  change in number of units consumed
• Consumer Optimum
• Law of Diminishing Marginal Utility

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Graphing Total and Marginal Utility
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Calculating Utils
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Measuring Total and Marginal Utility
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Calculating Consumer Optimum

• And spend all your money!

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The Diamond- Water Paradox

• Why does water cost more than diamonds when water
  is a need and diamonds are frivolous?

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Decisions Regarding Utility
Firms Households Government

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