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Definition
| the ability to produce more of a good in a given amount of time |
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Definition
| The ability to produce a good with a lower opportunity cost |
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| How much of one good you have to give up to produce a unit of the other good. |
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| the amount of a good that a buyer is willing and able to purchase at a given price. |
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| A graph of the relationship between price and quantity demanded. |
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Definition
| the amount of a good that sellers are willing and able to sell at a given price. |
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Definition
| A graph of the relationship between price an quantity supplied |
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Definition
| a good for which, all else equal, a fall in income leads to an increase in demand |
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Definition
| a good for which, all else equal, a fall in income leads to a decrease in demand |
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Definition
| two goods for which an increase in the price of one leads to an increase in the demand for the other. |
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Definition
| two goods for which an increase in the price of one leads to a decrease in the demand for the other. |
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Definition
| two goods that can be substituted for each other in a specific ratio (straight line indifference curves.) |
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Definition
| two goods which must be consumed in a specific ratio together (right angle indifference curves) |
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Definition
| a price (P*) and quantity (Q*) such the QS = QD = Q*. |
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Definition
| the limit on the consumption bundles that a consumer can afford. |
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Definition
| A curve that shows the consumption bundles that give the consumer the same level of satisfaction. |
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Term
| Marginal Rate of Substitution |
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Definition
| The rate at which a consumer is willing to trade one good for another and stay on the same indifference curve. |
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Term
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Definition
| The change in consumption that results when a price change moves a consumer to a higher or lower indifference curve |
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Term
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Definition
| The change in consumption that results when a price change moves a consumer to a new point on the same indifference curve to a new Marginal rate of substitution. |
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