Textbook Notes (368,192)
United States (205,969)
Economics (294)
ECON 200 (117)
Dr.Neri (15)
Chapter 21

Microeconomics chapter 21.docx

2 Pages
Unlock Document

ECON 200

Microeconomics Chapter 21  What the consumer can afford given the income and price of goods  Budget constraint: the limit on the consumption bundles that a consumer can afford.  The rate at which the consumer can trade one good for another. (slope- opportunity cost)  Indifference curve: shows the 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.  Choose the point on the higher indifference curve.  4 properties of indifference curves  Higher indifference curves are preferred to lower ones. (get more)  Indifference curves are downward sloping  Indifference curves do not cross  Indifference curves are bowed inward  Perfect substitutes: two goods with straight line indifference curves  Perfect complements: two goods with right angle indifference curves.  The point at which the indifference curve and the budget constraint touch is called the optimum. (tangent)  Slope of indifference curve is the marginal rate of substitution (consumer)  Slope of the budget constraint is the relative price (market)  Choose where the marginal rate of consumption
More Less

Related notes for ECON 200

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.