To explain:
The effect on the amount of utility experienced with an increase in amount of budget.
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.
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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Chapter 16A Solutions
Principles of Economics (Second Edition)
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