Economics - Chapter -
Consumer's Equilibrium and Demand - Important Definitions
Consumer:
It is an economic agent who consumes final goods and services.
Total Utility:
It is the sum of satisfaction from consumption of all the units of a commodity at a given time.
Marginal Utility:
It is a net increase in total utility by consuming an additional unit of a commodity.
Law of Diminishing Marginal Utility:
As consumer consumes more and more units of commodity. The Marginal utility derived from the last each successive units goes on declining.
Consumer’s Bundle:
It is a quantitative combination of two goods which can be purchased by a consumer from his given income.
Budget set:
It is quantitative combination of those bundles which a consumer can purchase his from given income at prevailing market prices.
