01:220:102 Lecture Notes - Lecture 10: Marginal Cost, Budget Constraint, Marginalism

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Substitution effect in the price of a good. A measure of the satisfaction and consumer derives from the consumption of goods and services. Collection of all the goods and services consumed by that individual. Total utility generated by an individuals consumption bundle. The change in total utility generated by consuming one additional good. Shows how marginal utility depends on the quantity of a good or service consumed. Each successive unit of a good or service consumed adds less to total utility then the previous unit. No. some goods you like more after you ve had a few. Requires the cost of a consumers consumption bundle be no more then the consumers total income. Set of all consumption bundles that can be consumed given the consumers income and prices of goods. Shows the consumption bundles available to a consumer. The consumption bundle that maximizes a consumers total utility given his or her budget constraint.

Related Questions

13. In economics, the term marginal utility is defined as the a. change in total satisfaction caused by the consumption of an additional unit of the good. b. average utility of each unit of a good consumed. c. inverse of the measure of total utility. d. total satisfaction received from consumption of a good. e. price of the last unit consumed.

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

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Fill in the blanks:

Your taste determines the ______you derive from consuming a particular good
_________utility is the change in _______utility resulting from a unit additional change in the consumption of a good.
As long as marginal utility is positive, total utility is
The law of diminishing marginal utility states that as an individual consumes more of a good during a given time period, other things constant, total utility _______

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01:220:102 Lecture Notes - Lecture 10: Marginal Cost, Budget Constraint, Marginalism

01:220:102 Full Course Notes

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