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14 Cards in this Set
- Front
- Back
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Utility
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measure of the satisfaction received from possessing or consuming goods and services. used to capture the general concept of happiness/satisfaction
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Diminishing Marginal Utility
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the principle that the more of a good that one obtains in a specific period of time, the less is the additional utility yielded by an additional unit of that good.
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Marginal Utility
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the extra utility derived from consuming one more unit of a good or service. reflects the difference from one unit to the next
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Disutility
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dissatisfaction
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Total Utility
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a measure of the total satisfaction derived from consuming a quantity of some good or service. total of units of marginal utility
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Equimarginal Principle
or Consumer Equilibrium |
to maximize utility, consumers must allocate their scarce incomes among goods so as to equate the marginal utilities per dollar of expenditure on the last unit of each good purchased.1~(MU)/P= 2~(MU)/P
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Consumer Surplus
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the difference between what the consumer is willing and able to pay for a unit of a good and the price that the consumer actually has to pay
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Sustitution Effect
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indicates that following a decrease in the price of a good or servicem an individual will puchace more of the now less expensive good and less o the other goods
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Income Effect
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the income effect of a price change indicates that an individual's income can buy more of all goods when the price og one good declines, everything else held constant
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Indifferent
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lacking any preference
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Indifference Curve
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a curve showing all combinations of two goods that the consumer is indifferent among. WILLING TO BUY
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Indifference Map
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a complete set of indifference curves
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Budget Line
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a line showing all the combinations of goods that can be purchased with a given level of income. ABLE TO BUY
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Indifference/Demand Curve Equilibrium
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occurs at the point where the budget line just touches, or is tangentto, an indifference curve
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