Micro 3

Question 1

What is utility?

Answer 1

The total satisfaction received from consuming a good or service.

Question 2

What is marginal utility?

Answer 2

The satisfaction gained for consuming one more good or service

Question 3

What is a market?

Answer 3

Any place where goods and services are exchanged between buyers and sellers. Can be a physical location but also can exist online.

Question 4

Diminishing marginal utility?

Answer 4

The phenomenon whereby, as the units of a good or service consumed are increased, the marginal utility of each new unit consumed will diminish.

Question 5

What is demand?

Answer 5

The quantity of a good and service that consumers are willing and able to. Yh at a range of prices over a given period of time

Question 6

What is the substitution effect?

Answer 6

When there are other goods available that can act as replacements. If price increases consumers are more likely to switch to a substitute food

Question 7

What is income effect?

Answer 7

As prices for good or service fall you are able to afford more of it as it takes up less percentage of your income you are more likely to consume more.

Question 8

What causes a shift in demand?

Answer 8

Population
Advertising
Substitutes
Income
Fashion and trends
Income tax
Complementary goods