Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
marginal utility analysis utility total utility marginal utility law of diminishing marginal utility utility- behavioral economics sunk cost sunk cost fallacy framing bias altruism budget line | Occurs when people make decisions based on how much was already spent, rather than how the decision might affect their current well- As we consume more of a given product, the added satisfaction we get from consuming an additional unit declines. A theoretical framework underlying consumer decision making. This approach assumes that satisfaction can be measured and that consumers maximize satisfaction when the marginal utilities per dollar are equal for all products and services. The study of how human psychology enters into economic behavior as a way to explain why individuals sometimes act in predictable ways counter to economic models. Total utility is maximized where the marginal utility per dollar is equal for all products, or MUa/Pa = MUb/Pb = . . . = MUn/Pn. The additional satisfaction received from consuming one more unit of a given product or service. Actions undertaken merely out of goodwill or generosity. A cost that has been paid and cannot be recovered; therefore, it should not enter into decision making affecting the present or future. A hypothetical measure of consumer satisfaction. Describes when individuals are steered into making one decision over another or are convinced they are receiving a higher value for a product than what was paid for it. The total satisfaction that a person receives from consuming a given amount of goods and services. A line that graphically illustrates the possible combinations of two goods that can be purchased with a given income, given the prices of both goods. |