Economics (McConnell), AP* Edition, 20th EditionChapter 7:
Utility MaximizationAfter studying this chapter, you should be able to: LO 7.1 | Define and explain the relationship between total utility, marginal utility, and the law of diminishing marginal utility. | LO 7.2 | Describe how rational consumers maximize utility by comparing the marginal utility-to-price ratios of all the products they could possibly purchase. | LO 7.3 | Explain how a demand curve can be derived by observing the outcomes of price changes in the utility-maximization model. | LO 7.4 | Discuss how the utility-maximization model helps highlight the income and substitution effects of a price change. | LO 7.5 | Give examples of several real-world phenomena that can be explained by applying the theory of consumer behavior. | LO 7.6 | (Appendix) Relate how the indifference curve model of consumer behavior derives demand curves from budget lines, indifference curves, and utility maximization. |
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