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13 Cards in this Set
- Front
- Back
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Utility |
satisfaction, or pleasure, that people receive from consuming a good or service |
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Total utility |
amount of satisfaction received from all the units of a good and service consumed |
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Marginal utility |
change in total utility from one additional unit of a good or service |
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Law of diminishing marginal utility |
extra satisfaction of a good or service declines as people consume more in a given period |
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Consumer equilibrium |
total utility cannot increase by spending more of a given budget on one good or spending less on another |
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Income effect |
change in quantity demanded of a good or service caused by a change in real income |
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Substitution effect |
change in quantity demanded of a good or service caused by the change in its price relative to its substitutes |
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Indifference curve |
different combinations of two goods that provide the same satisfaction or total utility to a consumer |
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Marginal rate of substitution |
consumer is willing to substitute one good for another good without a change in total utility |
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Indifference map |
selection of indifference curves with each curve representing a different level of satisfaction or total utility |
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Budget line |
line that represents all combinations of two goods that a consumer can purchase with a fixed amount of money given the price of each good |
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Indifference curve |
Back (Definition) |
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Budget line |
Back (Definition) |
