consumer surplus

Consumer surplus

The difference between the total value to the consumer of consuming a specific amount of a good and the amount the consumer must pay for that amount.

Diminishing marginal utility

As a consumer purchases more of a good in a specific time period, the additional satisfaction enjoyed from the additional unit of the good will diminish.

Marginal analysis

A consumer will maximize his or her total well-being if the last dollar spent on each good provides the same marginal utility.

Marginal utility

The change in total utility or satisfaction resulting from consuming one more unit of a good or service.

Real income

Income adjusted for price changes; a measure of the amount of goods and services one can purchase.

Total utility

The total amount of satisfaction enjoyed from consuming a specific amount of a good or service.

Utility

The satisfaction gained from consuming a good or service.