Principles of Economics (Second Edition)
Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
Question
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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
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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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