Theory of consumer behavior: concept of utility(part 1) *Utility is the amount of satisfaction that a consumer derives from the consumption of goods and services at a particular time. *Total utility is the total amount of satisfaction or fulfillment that a consumer derives through the consumption of a specific good or service. *Marginal utility is the change in total utility resulting from one unit change in the consumption of a given commodity. *The law of diminishing marginal utility states that the marginal utility of a good or service declines as more of it is consumed by an individual . Elasticity of demand *Elasticity is a term used to describe how one variable responds to a change in the other. *There are three types of elasticity of demand, namely: 1. Price elasticity of demand 2. Cross elasticity of demand 3. Income elasticity of demand *Price elasticity of demand is the degree of responsiveness of demand to changes in price. Degrees of price elasticity 1. Elastic demand is one in which the change in quantity demanded due to a change in price is large . 2. Inelastic demand is one in which the change in quantity demanded due to a change in price is small. To be continued…. Q1. Effective demand in #Economics means? Q2. What is utility?