RATIONAL
DECISION MAKING
MICROECONOMICS
, DEFINTIONS
Utility = a measure of overall satisfaction or wellbeing (not solely
derived from wealth) influences the price we are willing to pay for a
g/s.
Homo Economicus = utility maximiser (with available funds) use
marginal utility to compute optimal solution.
Marginal utility = the utility received from purchasing an extra unit o
a good.
Law of Diminishing Marginal Returns with each unit consumed, the
marginal utility gained falls.
DECISION MAKING
MICROECONOMICS
, DEFINTIONS
Utility = a measure of overall satisfaction or wellbeing (not solely
derived from wealth) influences the price we are willing to pay for a
g/s.
Homo Economicus = utility maximiser (with available funds) use
marginal utility to compute optimal solution.
Marginal utility = the utility received from purchasing an extra unit o
a good.
Law of Diminishing Marginal Returns with each unit consumed, the
marginal utility gained falls.
