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14 Cards in this Set

  • Front
  • Back
measures the responsiveness of one variable to a change in another
perfectly elastic
elassticity of infinity, demand or supply would be drawn as a horizontal line
perfectly inelastic
elasticity of zero - demand or supply would be drawn as a vertical line
satisfaction recieved from consumption of a good
unit of measurement of utility
total utility
as Qd goes up, TU goes down
marginal utility
willingness to pay
Law of Diminishing Marginal Utility
Qd goes up while marginal utility goes down
consumer surplus
the difference between total amount you're willing to pay and the total paid for a given quantity
CS= willing to pay - actually paid
economies of scale/ increasing returns to scale
when increasing all inputs causes a more-than-proportional increase in output. associated with declining long-run average cost
diseconomies of scale/ decreasing returns to scale
when increasing all inputs leads to a less than proportional increase in output. associated with increasing long-run avg. cost
price elasticity of demand
measures the BUYERS relative responsiveness of a price change
opportunity cost of capital
the rate of return from the next best investment (money you could have made in a different industry)
excise tax
per unit tax (every time you sell a good you pay $$)