# Shared Flashcard Set

## Details

ECN 143:Notes:Day 13
ECN 143:Notes:Day 13
27
Economics
02/24/2016

Term
 When consumer income increases what happens to their budget?----
Definition
 It allows them to spend more money, allowing for a larger budget.----
Term
 Do indifference curves shift?---
Definition
 No---
Term
 Do Budget Lines Shift?---
Definition
 Yes---
Term
 What kind of good do consumers buy more of when income increases?----
Definition
 Normal Goods---
Term
 What kind of good do consumers buy less of when income increases?---
Definition
 Inferior Goods----
Term
 Consumers strive to do what?---
Definition
 Maximize utility---
Term
 Indifference curves do not what?---
Definition
 Shift or Cross----
Term
 Who was Ernst Engel?---
Definition
 The founding father of modern microeconomic theory analysis.----
Term
 What did Ernst Engel prove?---
Definition
 At least one good in a consumer's budget must be a normal good.---
Term
 In Indifference Curve analysis of two indifference curves you cannot illustrate both curves as being what kind of good?---
Definition
 Inferior Goods----
Term
 What else did Ernst Engel coin?---
Definition
 Using AOG or All other Goods to illustrate all other goods on an indifference curve.----
Term
 How are budget constraints represented?-----
Definition
 A negative diagonal line.----
Term
 Where is the utility maximization point?----
Definition
 Where the budget constraint intersects with an indifference curve.----
Term
 How does one Algebraically Calculate Budget Constraints?----
Definition
 Total Income= ("Price of Good X" x "Amount of Good X Purchased") + ("Price of Good Y" x "Amount of Good Y Purchased")----
Term
 How does one obtain the expression for the budget line?----
Definition
 y=(I/Py)-(Px/Py)X---
Term
 What does "I" Represent?[Budget Analysis]---
Definition
 Total Income
Term
 What does "PxX" Represent?[Budget Analysis]---
Definition
 ("Price of Good X" x "Amount of Good X Purchased")
Term
 What does "PyY" Represent?[Budget Analysis]---
Definition
 ("Price of Good Y" x "Amount of Good Y Purchased")---
Term
 What is the Horizontal Intercept of a Budget Line?---
Definition
 I/Px---
Term
 What is the Vertical Intercept of a Budget Line?---
Definition
 I/Py---
Term
 What is the slope of a budget line?----
Definition
 -Px/Py=Price Ratio----
Term
 What does Py Represent?[Budget Analysis]-------
Definition
 Price of Good Y----
Term
 What does Px Represent?[Budget Analysis]------
Definition
 Price of Good X----
Term
 What does "X" Represent?[Budget Analysis]----
Definition
 Amount of Good X purchased----
Term
 What does "Y" Represent?[Budget Analysis]----
Definition
 Amount of Good Y purchased----
Term
 Budget Analysis methods can be extended to what?---
Definition
 Anything you can imagine----
Term
 What is Corner Equilibrium/Solution?---
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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