Giffen Good
A Giffen good is an unusual type of inferior good in which an increase in price leads to an increase in quantity demanded, contradicting the typical inverse relationship between price and demand.
Consumer Theory
Consumer theory is a branch of microeconomics that studies the variables that affect purchasing decisions. It covers factors such as budget constraints, utility, and product choice – looking at how these affect the final consumers decision making.
Indifference Curve
An indifference curve is a graphical representation that shows different combinations of two goods, each providing the same level of satisfaction or utility to an individual.
Marginal Analysis Definition and Examples
Marginal analysis is the economic tool used to determine the optimal level of consumption or production by comparing the additional benefit gained from consuming or producing one more unit to the additional cost incurred.
Marginal Benefit Definition and Examples
Marginal benefit is the extra benefit or utility that an individual receives from consuming or producing one additional unit of a good or service.
Consumer Goods: Definition, Types & Examples
A consumer good, also known as a ‘final good’, is the end product a business produces and is purchased by the consumer.
Utility Maximization: Definition, Example & Limitations
Table of Contents What is Utility Maximization Utility Maximization Rule Utility Maximization Example Limitations of Utility Maximisation Utility Maximization FAQs Utility Maximization: Definition, Example & Limitations Written by Paul Boyce Posted in Microeconomics > Consumer Theory Last Updated February 9, 2023 What is Utility Maximization Utility maximisation is the concept that consumers and businesses seek
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Substitute Goods: What it is, Types & Examples
A substitute good is a product or service that is used in place of another.
Complementary Goods: Definition & Examples
A Complementary good is a product or service that adds value to another. In other words, two goods that the consumer uses together. For example, cereal and milk, or a DVD and a DVD player.
Income Effect: What it is, Examples & Graph
Where changes in income, affect the demand for goods. As incomes rise, demand tends to rise. As incomes fall, demand tends to fall.
Marginal Utility: Definition, Formula & Example
Marginal Utility is the enjoyment or satisfaction that a consumer gains for each additional unit they consume. So it calculates the utility beyond the first product or service consumed (the marginal amount).