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15 Cards in this Set

  • Front
  • Back
"Utility"
(p. 250)
The _____ of a consumer is a measure of the satisfaction the consumer derives from consumption of goods and services.
"Consumption bundle"
(p. 250)
An individual's _________ is the collection of all the goods and services consumed by that individual.
"Utility function"
(p. 250)
An individual's _________ gives the total utility generated by his or her consumption bundle.
"Util"
(p. 250)
A _______ is a unit of utility.
"Marginal utility"
(p. 251)
The _________ of a good or service is the change in total utility generated by consuming one additional unit of that good or service.
"Marginal utility curve"
(p. 251)
The _________ shows how marginal utility depends on the quantity of a good or service consumed.
"Principle of diminishing marginal utility"
(p. 252)
The _________ says that each successive unit of a good or service consumed adds less to total utility than the previous unit.
"Budget constraint"
(p. 254)
A _______ requires that the cost of a consumer's consumption bundle be no more than the consumer's income.
"Consumption possibilities"
(p. 254)
"A consumer's __________ is the set of all consumption bundles that can be consumed given the consumer's income and prevailing prices.
"Budget line"
(p. 254)
A consumer's _______ shows the consumption bundles available to a consumer who spends all of his or her income.
"Optimal consumption bundle"
(p. 255)
A consumer's ___________ is the consumption bundle that maximizes the consumer's total utility given his or her budget constraint.
"Marginal utility per dollar"
(p. 259)
The _________ spent on a good or service is the additional utility from spending one more dollar on that good or service.
"Optimal consumption rule"
(p. 261)
The __________ says that when a consumer maximizes utility, the marginal utility per dollar spent must be the same for all goods and services in the consumption bundle.
"Substitution effect"
(p. 264)
The _________ of a change in the price of a good is the change in the quantity of that good consumed as the consumer substitutes the good that has become relatively cheaper in place of the good that has become relatively more expensive.
"Income effect"
(p. 264)
The _________ of a change in the price of a good is the change in the quantity of that good consumed that results from a change in the consumer's purchasing power due to the change in the price of the good.