An indifference curve involving two goods identifies the:
1. Utility maximizing bundles of the two goods associated with a consumer’s utility function.
2. Equilibrium combination of the two goods that can be purchased with a given income.
3. Bundles of the two goods that yield the same level of utility.
4. Possible combinations of the two goods that a consumer can purchase, given income and the prices of the goods.
An indifference curve involving two goods identifies the:
1. Utility maximizing bundles of the two goods associated with a consumer’s utility function.
2. Equilibrium combination of the two goods that can be purchased with a given income.
3. Bundles of the two goods that yield the same level of utility.
4. Possible combinations of the two goods that a consumer can purchase, given income and the prices of the goods.
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budget line
marginal utility
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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
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1. |
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The satisfaction or benefit that consumers receive from consuming goods or services.
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2. |
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A particular combination of specific quantities of goods or services |
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3. |
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Consumers can rank all conceivable bundles of goods or services |
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4. |
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If A is preferred to B, and B is preferred to C, then A is always preferred to C. |
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5. |
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Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services. |
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6. |
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A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility. |
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7. |
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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. |
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8. |
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The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant. |
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9. |
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The line showing all bundles of goods that can be purchased at given prices if the entire income is spent. |
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10. |
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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. |
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11. |
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The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes. |
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12. |
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The sum of the substitution and income effects. |
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13. |
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A good for which quantity demanded varies directly with price, causing an upward sloping demand curve. |
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14. |
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A list of prices and the corresponding quantity consumers are willing and able to purchase at each price. |
