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8 Cards in this Set

  • Front
  • Back
What is the Law of Demand?
People do less of what they want to do as the cost of doing it rises.
What is Marginal Utility?
The additional utility gained from consuming an additional unit of a good.
What is the Law of diminishing marginal utility?
The tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point.
What is optimal combination of goods?
The affordable combination that yields the highest total utility.
What is the Rational Spending Rule?
Spending should be allocated across goods so that the marginal utility per dollar is the same for each good.
What is real price?
The dollar price of a good relative to the average dollar price of all other goods.
What is nominal price?
The absolute price of a good in dollar terms.
What is consumer surplus?
The difference between a buyer's reservation price for a product and the price actually paid.