PRIN.OF ECON.ACCESS CODE
2nd Edition
ISBN: 9780393691757
Author: Mateer
Publisher: NORTON
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Question
Chapter 16A, Problem 1QFR
To determine
To explain:
The effect on the amount of utility experienced with an increase in amount of budget.
Expert Solution & Answer
Explanation of Solution
When the budget of a consumer rises, it means the consumer can purchase more amount of different goods, which raises its total utility derived from their consumption. With the limited income, the consumer can consume limited amount of goods and services. However, when the income rises, the consumer can spend more and consume more. As a result, total utility rises.Note that it is assumed that a consumer will consume up to the extent where the total utility is maximum.
Economics Concept Introduction
Total utility:
It refers to the aggregate level of utility or satisfaction that an individual gets after consuming commodities and consuming services.
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Chapter 16A Solutions
PRIN.OF ECON.ACCESS CODE
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Similar questions
- How a price change affects consumer optimum?arrow_forwardUsing the consumer choice theory, explain how an individual decides what combination of different products to buy?arrow_forwardExplain what the utility maximizing choice means. Discuss how you could use marginal utility to make consumer choicesarrow_forward
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