consumer surplus
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7 Terms
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.
