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Utility
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=== Constrained utility optimisation === Rational consumers wish to maximise their utility. However, as they have budget constraints, a change of price would affect the quantity of demand. There are two factors could explain this situation: * Purchasing power. Individuals obtain greater purchasing power when the price of a good decreases. The reduction of the price allows individuals to increase their savings so they could afford to buy other products. * Substitution effect. If the price of good A decreases, then the good becomes relatively cheaper with respect to its substitutes. Thus, individuals would consume more of good A as the utility would increase by doing so.
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