![]() Consumer Equilibrium – It is attained at the point of tangency (the point where the budget line touches but does not cross the indifference curve) between the budget line and the highest possible indifference curve. Budget/Income – It is the amount allocated for buying the goods. Law of Diminishing Marginal Rate of Substitution –It indicates that consumer gives up less and less amount of cookies in favor of additional units of candies. It is also the slope of indifference curve. MU for Milk MU for Bread = Price of Milk Price of Bread Marginal Rate of Substitution (MRS ) - It measures the maximum amount of one good given up in order to consumer more units of the other good. Relationship between Total Utility and Marginal Utility Table 1 TOTAL UTILITY MARGINAL UTILITY IMPLICATIONS increasing positive satisfied constant zero satiated decreasing negative dissatisfiedĮquimarginal Principle – states that consumers maximize their utility or satisfaction when the marginal utility they get per price of a certain good is the same as the marginal utility achieved per price of any other good. Law of Diminishing Marginal Utility Change in TU MU = Change in Q Where MU – Marginal Utility TU – Total Utility Q - Quantity Law of Diminishing Marginal Utility - It asserts that as more and more of a commodity is concerned, his additional utility from every unit consumed tend to become less and less. Utils – unit of measure to quantify utility or satisfaction. Marginal Utility - means the additional satisfaction or utility one gets from consuming an additional unit of a good. Wants – have to be satisfied in order to live comfortably. Needs – have to be satisfied for an individual to live. Consumer Equilibrium Patterns of Filipino Consumption The Responsible Consumer Consumer Equilibrium Indifference Curve Approach a. Wants Analysis of Consumer Behavior Marginal Utility Approach a. TOPICS: Consumer Behavior Analysis of Demand Analysis of Supply Market Equilibrium Production and Cost Theories Market Structure and Price-Output Determination ĬONSUMER BEHAVIOR Needs vs. Basic Economics With Taxation And Agrarian Reform boa ![]()
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