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Law of diminishing marginal utility
Added satisfaction declines as a consumer acquires additional units of a given product
Utility
Want-satisfying power
Total utility
Total amount of satisfaction/pleasure a person derives from consuming some specific quantity
Consumer
________ will only buy additional units of a product if its price falls.
Marginal utility
Extra satisfaction gained from an additional unit
Rational behavior
Consumers are rational people who use income to derive the greatest amount of utility
Budget constraint
Consumers have a fixed, limited amount of money income
Utility-maximizing 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
Consumer equilibrium
When the consumer has balanced their margins and has no incentive to alter their spending pattern
Income effect
Impact that a change in the price of a product has on a consumer’s real income and the quantity demanded
Substitution effect
Impact that a change in a product’s price has on its relative expensiveness and the quantity demanded
Note 
Flashcard (61)