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ECONOMICS Chapter 4 - Funsheet 1 - Key C4 EQ: How do prices & other factors affect the decision-making process of consumers?

Standard: SSEMI2 1. Microeconomics is the study of the economic behavior & decision making of small units such as individuals, families, and businesses. 2. Demand is the willingness to buy a good or service along with the ability to pay for it. 3. The law of demand states consumers buy more of a good when its price decreases (and less when its price increases). 4. Ceteris paribus means all other things remaining equal. 5. Utility is the ability of a good or service to satisfy your want for it. 6. Marginal utility is the additional satisfaction one gets from consuming an additional unit of a good. 7. The law of diminishing utility states additional units of consumption result in smaller increases in utility.

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