Term
| All points on and inside a consumer's budget line are... |
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Definition
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Term
| The principle of diminishing marginal utility means that as consumption of a good increases, total utility increases, but at a... |
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Definition
| Decreasing rate because the MU is positive but diminishing. |
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Term
| A household is maximizing utility if the marginal utility per dollar spent... |
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Definition
| Equal for all goods and all its income is spent. |
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Term
| If the marginal utilities from consuming two goods are not equal, the consumer could be... |
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Definition
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Term
| If the marginal utility per dollar spent on good X exceeds the marginal utility per dollar spent on good Y, total utility will increase by... |
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Definition
| Increasing consumption of X and decreasing consumption of Y. |
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Term
| If the marginal gain from an action exceeds the marginal loss, you should... |
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Definition
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Term
| When income decreases, the marginal utility derived from a good will always... |
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Definition
| Increase for a normal good but may not for an inferior good. |
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Term
| When the price of one good rises, demand... |
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Definition
| Increases for substitutes because they are now relatively cheaper. |
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Term
| When income increases, the quantity demand of all goods... |
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Definition
| Increases for normal goods but decreases for inferior goods. |
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Term
| In consumer equilibrium, price is proportional to... |
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Definition
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Term
| A demand curve describes the quantity demand at each price when... |
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Definition
| Total utility is maximized. |
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Term
| If a shift in supply decreases the price of a good... |
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Definition
| Consumer surplus increases |
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Term
| Studies how limits on the human brain's ability to computer and implement rational decisions influences... |
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Definition
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Term
| Do all economists agree that it is important to explain what goes on inside people's heads? |
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Definition
| No. Most economists do not agree on importance of new areas on economics. |
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Term
| When the price of good X rises, does the marginal utility from the consumption of X decrease? |
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Definition
| Not necessarily. Rising P causes decreased Q and increased MU. |
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