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17 Cards in this Set
- Front
- Back
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the property of a good that enables it to satisfy human wants
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Utility
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the sum of utility through a specific quantity of consumption
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Total Utility
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The extra utility fom consuming one additional unit of a good
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Marginal utility
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An arbitrary unit of utility
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Util
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The extra utility from consuming a good eventually decreases
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Law of diminishing marginal utility
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An individual can attach specific values or number of utils from consuming each quantity of agood or basket of goods
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Cardinal Utiltiy
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An individual ranks the utitlites between various goods or baskets of goods
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Ordinal Utility
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A commodity that provides utiltiy to consumers
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Good
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A commodity that provides disutitlty to consumers
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Bad
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Shows the various combinations of two goods which yield equal utility or satisfaction.
_________ do not cross, have a negativew slope, and are convex to the origin |
Indifference Curve
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The amount of one good an individual is willing to give up for an adidtional amount of another good while maintaining the same level of satisfaction or remaining on the same indiffernce curve.
The ____- declines as we move down the indiffernce curve |
MRS: Marginal Rate of Substitution
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A good for which the consumer is indiffernt betwen having more or less of it. If good X is a neuter,
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Neuter
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Negatively sloped straight line indiffernce curves (slope is constant)
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Perfect substitutes
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Result of limited income and the given prices of goods
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Budget Constraint
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Shows the various combinations of two goods a consumer can purchase spending all income at the given prices of the two goods
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Budget Line
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Results from changing consumer income; new budget line will be parallel to the original one and have the same slope
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Shift in the budget line
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Results from changing the price of a single good (slope changes)
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Rotate budget Line
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