In my second column for Economic Review, I continue highlighting the fundamental basics of economics in some of the articles and explain them. In your examinations you can then apply the same principles to any questions that arise.
In his Getting Started column, Peter Smith talks about incentives for consumers. He says that economists assume that a normal consumer attempts to maximise their satisfaction or utility. Utility is the satisfaction a consumer gains by consuming or possessing a good or service. A good has utility if it has the power to satisfy a want and, therefore, utility is a subjective measure. For instance, Amy may like to consume apples and she gains a utility of 20 from consuming one apple. Ben may not like to consume apples and may only gain a utility of five from consuming one apple.
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