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### 25 Cards in this Set

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 Decide how much to consume of each available product, given income & prices Consumers Economic Agents who decide how much to produce given its resources Firms Relationship of willingness to buy Demand Function Measure of sensitivity of demand to changes in price Elasticity When you totally satisfy both the supplier and cunsumer Market Equilibrium When |E| = 1 Unitary Elasticity When |E| greater than 1 Elastic When |E| is less than 1 Inelastic Formulate a theory of individual behavior Consumer theory What individuals want Consumer preferences What individuals can do Budget Constraints What individuals can actually do Consumer Choice Showing the indifference of two products Utility amount of one good a consumer is willing to give up for one more of the other Marginal Rate os Substitution Where MRS is not equal to the slope Corner Solution relates quantity of a good consumed compared to income Engel Curve Change in consumption of a good associated with a change in its price, with level of utility held constant Substitution Effect change in consumption of a good resulting from increase in purchasing power with relative prices held constant Income Effect when the income effect is so strong the total effect ends up negative (like irish potato famine) Giffen Goods Curve relating the quantity of a good that all consumers in a market will have to buy, to its price Market Demand Curve Difference between what a consumer is willing to pay for a good, and the amount actually paid Consumer Surplus If increase of price of one leads to increase in quantity demanded of the other Substitutes if increase in price of one good leads to decrease in quantity demanded of the other Complemets Curve tracing the utility-maximizing combinations of hte two goods as the price of one changes Price Consumption Curve Curve that relates the quantity of a good that a single consumer will buy to its price Individual Demand Curve