Customers use many products that give them pleasure or satisfaction.
Utility refers to the measure of satisfaction or well-being that a consumer derives …
Consider a girl riding her motorcycle under the hot sun, feeling thirsty.
Spotting a gas station, she buys a bottle of water. This first bottle of water …
Total utility, or TU, is the overall satisfaction with the consumption of all units of a product. Consider the utility that John gets from eating pizzas …
Consumer preferences are based on a few assumptions that help simplify consumer behavior.
A market basket or a bundle refers to a combination of goods and …
Nancy loves coffee and sandwiches. Her preferences for various combinations of coffee and sandwiches consumed weekly are represented in IC1. It gives her …
The marginal rate of substitution, or MRS, is the rate at which a consumer is ready to give up one product in exchange for another while maintaining the …