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10 Cards in this Set
- Front
- Back
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Marginal utility analysis
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the change in utility one consums an additional unit of good
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Budget line
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graphically illustrates the possible combinations of two goods that can be purchased with a given income, given the prices of both products
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Utility
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the total satisfaction one gets by consuming a good
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Marginal utility
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the satisfaction recieved from consuming an additional unit of a given product or service
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Law of diminishing marginal utility
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as one consumes additonal units of a good, marginal utility falls
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Utility maximizing rule
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utility is maximized where the marginal utlity per dollar is equal for all products
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Consumers surplus
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the difference between what consumers are willing to pay and whay they actually pay for a product in the market
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Indifference curve
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which shows the combinations of two goods that give a consumer the same level of utility
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Substitution map
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when the price of one good rises, consumers will subsititute other goods for that good
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Consumer equalibrium
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highest utility reached
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