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When consumer income increases what happens to their budget?
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Definition
It allows them to spend more money, allowing for a larger budget.
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Do indifference curves shift?
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Do Budget Lines Shift?
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What kind of good do consumers buy more of when income increases?
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What kind of good do consumers buy less of when income increases?
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Consumers strive to do what?
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Indifference curves do not what?
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Definition
The founding father of modern microeconomic theory analysis.
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Term
What did Ernst Engel prove?
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Definition
At least one good in a consumer's budget must be a normal good.
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Term
In Indifference Curve analysis of two indifference curves you cannot illustrate both curves as being what kind of good?
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What else did Ernst Engel coin?
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Definition
Using AOG or All other Goods to illustrate all other goods on an indifference curve.
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Term
How are budget constraints represented?
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Definition
A negative diagonal line.
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Term
Where is the utility maximization point?
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Definition
Where the budget constraint intersects with an indifference curve.
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How does one Algebraically Calculate Budget Constraints?
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Definition
Total Income= ("Price of Good X" x "Amount of Good X Purchased") + ("Price of Good Y" x "Amount of Good Y Purchased")
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Term
How does one obtain the expression for the budget line?
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Term
What does "I" Represent?
[Budget Analysis]
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Definition
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Term
What does "PxX" Represent?
[Budget Analysis]
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Definition
| ("Price of Good X" x "Amount of Good X Purchased") |
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Term
What does "PyY" Represent?
[Budget Analysis]
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Definition
("Price of Good Y" x "Amount of Good Y Purchased")
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Term
What is the Horizontal Intercept of a Budget Line?
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Definition
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What is the Vertical Intercept of a Budget Line?
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Definition
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Term
What is the slope of a budget line?
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Definition
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Term
What does Py Represent?
[Budget Analysis]
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Definition
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Term
What does Px Represent?
[Budget Analysis]
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Definition
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Term
What does "X" Represent?
[Budget Analysis]
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Definition
Amount of Good X purchased
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Term
What does "Y" Represent?
[Budget Analysis]
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Definition
Amount of Good Y purchased
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Term
Budget Analysis methods can be extended to what?
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Definition
Anything you can imagine
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Term
What is Corner Equilibrium/Solution?
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Definition
Consumer equilibrium (Utility Maximization) in which one of the goods is not consumed at all. The Utility maximization point is right where the (y-axis or x-axis depending on which good is not being consumed) touches the budget line.
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