Unit 2: Elasticity, Consumer Choice, Costs

Lesson 6a: Consumer Decisions: Utility Maximization

Key Terms

 

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Key Terms:

utility, total utility (TU), marginal utility (MU), law of diminishing marginal utility, rational behavior, benefit-cost analysis, budget constraint, utility-maximizing rule, marginal utility per dollar (MU/P), "util", income effect, substitution effect, diamond-water paradox

 

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Lesson 6a