behavioral economics

Cards (13)

define being rational 
individuals maximising their own utility
define economic incentives 
the price or any factor that shifts the demand curve
define rational economic decision making 
weighing all costs and benefits and picking the option that maximises utility
define utility  
a measure of satisfaction or welfare gained by consumption
define total utility 
the cumulative utility gained by consumption
define marginal utility 
the additional utility an individual gained by consuming one more good or service
what is the hypothesis of diminishing marginal utility
the marginal utility an individual gains from consuming a good or service decreases with each additional unit consumed
what is utility maximization constrained by
-limited time
-price
-limited income
-limited information
what is meant by margins in economics  
the impact of doing one more thing
what re the 4 things with margins in economics
-marginal utility
-marginal cost
-marginal revenue
-marginal return -output by employing one more person
what is the peak of the parabola called
the point of satiation
utility graphs  
the point of satiation is the same as the point where marginal utility turns negative.
how to calculate marginal utility
total utility - total utility of previous item