A consumer good, also known as a ‘final good’, is the end product a business produces and is purchased by the consumer. For example, microwaves, fridges, t-shirts, and washing machines, are all examples of consumer goods. They are final goods that the consumer purchases.
What is Utility Maximization Utility Maximization Rule Utility Maximization Example Limitations of Utility Maximisation Utility Maximization Definition WRITTEN BY PAUL BOYCE | Updated 19 January 2022 What is Utility Maximization Utility maximisation is the concept that consumers and businesses seek to maximise their satisfaction or utility from their purchases. In other words, when $100 is …
Price gouging is where the seller increases the prices of their goods or services to a level considered unreasonable and unfair. It arises due to a sharp surge in demand, normally as a result of natural disaster such as a hurricane or earthquake.
A substitute good is not necessarily just a physical product; it can also be a service. So to define substitute goods: it is a product or service that is used in place of another.
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.
The income effect is where a change in income has a subsequent effect on demand. In other words, as consumers incomes rise, they will demand more goods and services.
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).
The substitution effect occurs when consumers switch to substitute goods as prices rise. For example, if the price of chicken increases, then consumers may start to switch to substitute goods such as beef or pork.
