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13 Cards in this Set
- Front
- Back
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Price consumption curve
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curve tracing the utility-maximizing combinations of two goods as the price of one changes
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Individual demand curve
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utility that can be attained changes as we move along the curve
At every point along the curve, the consumer is maximizing possible utility |
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income consumption curve
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curve tracing the utility-maximizing combinations of two goods as a consumer's income changes
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normal vs inferior goods
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with inferior goods, as income increases, the consumption decreases (ex- income goes up, you buy less hamburgers/cheap food)
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Engel Curve
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Curve relating the quantity of a good consumed to income
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Substitution effect
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Change in consumption of a good associated with a change in its price, with the level of utility held constant
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Income effect
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Change in consumption of a good resulting from an increase in purchasing power, with relative prices held constant
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Giffen Good
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good whose demand curve slopes upward because the negative income effect is larger than the substitution effect
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Market Demand Curve
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Curve relating the quantity of a good that all consumer in a market will buy to its price
horizontal sum of all the consumers |
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Isoelastic Demand Curve
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Demand curve with a constant price elasticity
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Speculative Demand
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Demand driven not by the direct benefits one obtains from owning or consumer a good but instead by an expectation that the price of the good will increase
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Consumer Surplus
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Difference between what a consumer is willing to pay for a good and the amount actually paid (graph is like stairs)
found in the triangle above the price line and below the consumer surplus line |
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Network externality
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Situation in which each individual's own demand depends on the purchases of other individuals
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