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10 Cards in this Set
- Front
- Back
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Consumer Optimum
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A choice of a set of goods and services that maximizes the level of satisfaction for each consumer, subject to limited income.
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Diminishing Marginal Utility
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The principle that as more of any good or service is consumed, its extra benefit declines.
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Marginal Utility
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The change in total due to a one-unit change in the quantity of a good or service consumed.
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Priciple of Substitution
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The prnciple that consumers and producers shift away from goods and resources that become priced relatively higher in favor of goods and resources that are now priced relatively lower.
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Purchasing Power
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The value of money for buying goods and services. If your income stays the same but the price of one good that you ar ebuying goes up, your effective purchasing power falls, and vice versa.
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Real Income Effect
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The change in peoples purchasing power that occurs when, other things being constant, the price of one good they purchase changes. When the price goes up, real income, or purchasing power, falls, and when that proce goes down, real income increases.
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Substitution Effect
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The tendency of people to substitute cheaper commodities for more expensive commodities.
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Util
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A representative unit by which utility is measured.
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Utility
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The want-satisfying power of a good or service.
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Utility Analysis
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The analysis of consumer decision making based on utility maximization.
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