Chapter 5- Utility
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6 Terms
Utility
-is a want
- is subjective
-is difficult to measure
what is the unit of measurement for utility
utils
Total utility (TU)
the total amount of satisfactions or pleasure a person derives from consuming some specific quantity of a good or service
Marginal Utility (MU)
the actual satisfaction a consumer realizes from an additional unit of that product
what four consumption choices are made by the typical consumer
rational behavior, preference, budget constraint, prices
utility maximization rule
to maximize satisfaction, the consumer should allocate his or her money income so that the last dollar spent on each product yields the same amount of extra marginal utility
Note 
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