ECON 2310 Chapter Notes - Chapter 4: Substitute Good, Indifference Curve

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5 Dec 2013

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Preferences- tells us about a consumer"s likes and dislikes. Indifferent- a consumer is indifferent between two alternatives when liking (or disliking) them equally. Consumption bundle- the collection of goods that an individual consumes over a given period, such as an hour, a day, a month, a year or a lifetime. Indifference curve- starting with any alternative, an indifference curve shows all the other alternatives that a consumer likes equally well. Family of indifference curves- a collection of indifference curves that represents the preferences of the same individual. Bad- a bad is an object, condition or activity that makes a consumer worse off. Marginal rate of substitution for x with y- written is the rate at which a consumer must adjust y to maintain the same level of well-being when x changes by a tiny amount, from a given starting point.

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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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ECON 2310 Chapter Notes - Chapter 4: Substitute Good, Indifference Curve

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