ECN 104 Lecture Notes - Giffen Good, Ryerson University, Normal Good

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azureyellowjacket256

24 Oct 2013

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Budget constraint: the limit on consumption bundles that a consumer can afford. Consumption bundle a particular combination of goods (40 fish & 300 mangos) Qf (quantity of fish) = y (income) / pf (price of fish) Y = pm * qm + pf * qf. Slope (y/pm) / (y/pf) = pf / pm (rise over run) M = (y/pm) (pf / pm) * qf budget line. Indifference curve: shows consumption bundles that give the consumer the same level of satisfaction. If one quantity is reduced, one must be increased: higher indifference curves are preferred to lower ones. The rate at which a consumer is willing to trade one good for another. **mrs falls as you move down along an indifference curve. Perfect substitutes (extreme): two goods with straight-line indifference curves, constant mrs. Perfect complements two goods with right-angle indifference curves. Close substitutes- indifference curves for close substitutes are not very bowed.

Related Questions

budget line

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indifference curves

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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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ECN 104 Lecture Notes - Giffen Good, Ryerson University, Normal Good

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