Midterms: Lesson 9 Microeconomics in Consumer Behavior

•  is considered a person, group of people, or organizations that are the final users of a product or service.

  consumers
• it deals with understanding individual consumer decision-making and how it affects businesses.

   

  microeconomics
• true or false:

  The assumption is that consumers do not have an unlimited budget, so their available cash is spent to achieve the largest personal benefit within their financial limit, and consumers look to achieve the most happiness for the smallest cost.

  true
• it is the usefulness of something to an individual.

  utility
• 3 Assumptions in Microeconomics

  1. Importance of Utility
  2. Optimization
  3. Preferences
• is defined as a set of assumptions that focus on consumer choices that result in different alternatives such as happiness, satisfaction, or utility.

  consumer preferences
• Consumer Preference Assumptions

  1. Completeness
  2. Transitivity
  3. non-satiation
• this is when the consumer does not have indifference between two goods.

  completeness
• it is based on defining a relationship between goods, such as if a consumer prefers good A to good B, and prefers good B to good C, then the consumer should prefer good A to good C.

  transitivity
• this states that more of a good is always better as long as it does not affect the consumer's ability to utilize all other goods.

  non-satiation
• true or false: The purpose in understanding the consumer choice theory is a way of analyzing how consumers may achieve equilibrium between preferences and expenditures by maximizing utility or satisfaction in terms of their consumer budget limits.

  true
• In order for consumers to maximize utility or satisfaction, they should consume (Qx, Qy) from the chart.


  true
• it illustrates a household budget line which is used to determine the point of maximum utility or satisfaction.

  indifference curve