ECO 211 Study Guide - Final Guide: Budget Constraint, Indifference Curve, Giffen Good

201 views12 pages
carmineseal298 and 2 others unlocked
ECO 211 Full Course Notes
1
ECO 211 Full Course Notes
Verified Note
1 document

Document Summary

Budget constraint- the limit on the consumption bundles that a consumer can afford. Indifference curve- a curve that shows consumption bundles that give the consumer the same level of satisfaction. Marginal rate of substitution- the rate at which a consumer is willing to trade one good for another. Perfect substitutes- two goods with straight-line indifference curves. Perfect complements- two goods with right-angle indifference curves. Normal good- a good for which an increase in income raises the quantity demanded. Inferior good- a good for which an increase in income reduces the quantity demanded. Income effect- the change in consumption that results when a price change moves the consumer to a higher or lower indifference curve. Substitution effect- the change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution. Giffen good - a good for which an increase in the price raises the quantity demanded.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related textbook solutions

Related Documents

Related Questions