Utility deals with the total benefit an individual receives whereas marginal utility has to do with the benefit an additional item gives
Marginal utility per dollar is the marginal utility of a good divided by the price of the good (MUx/Px)
Most items face diminishing marginal utility – as you consume more and more items, the marginal utility decreases (or, the total utility increases and a decreasing rate)
In order to find the optimal consumption bundle, you set the marginal utility per dollar of two items equal to each other. (MUx/Px = MUy/Py).
Whatever item has a higher marginal utility per dollar is the item that a rational consumer will decide to consume
Ultimately, utility maximization is what people naturally do because everything is scarce and we must therefore make choices with limited resources (money, in this case).
Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.
This book created a 5-step plan to help you study more effectively, use your preparation time wisely, and get your best score. This book includes two full-length practice exams modeled on the real test, all the terms and concepts you need to know to get your best score, and your choice of three customized study schedules.
This book includes an in-depth preparation for both AP economics exams. It features two full-length practice tests, one in Microeconomics and one in Macroeconomics, and all test questions answered and explained. It also features a detailed review of all test topics, which include: supply and demand, theory of consumer choice, economics in the public sector, costs, perfect and imperfect competition, monopolies, labor resources, game theory, the national income and gross domestic product, inflation and unemployment, fiscal policy, money and banking, monetary policy, economic growth, international trade and exchange, interest rate determination, and the market for loanable funds.