Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Economics 202 Ch 18
Principles of Economics Ch 18
| Question | Answer |
|---|---|
| Utility | A measure of the satisfaction received from the consumption of a good. |
| Marginal Utility | The additional utility received from consuming an additional unit of a good. |
| Law of Diminishing Marginal Utility | The marginal utility from consuming additional units of a good eventually declines. |
| The law of diminishing marginal utility does not actually indicate: | Which person would receive greater marginal utility from additional income. |
| Utility cannot be: | Measured objectively. |
| Diamond-Water Paradox | The observation that essential goods are often lower priced than non-essential goods. |
| Consumers will attempt to maximize the utility (satisfaction) that they receive from their limited incomes. To determine the utility-maximizing combination of good to consume requires: | Consumers to consider how much marginal utility different goods yield, and also the prices of the different goods. |
| Utility Maximization Rule No. 1 | Always choose the marginal unit of the good that yields the most marginal utility per price. |
| Utility Maximization Rule No. 2 | Always choose the combination of goods that equalizes the ratio of marginal utility per price for all goods. |
| Government provision of essential goods free of charge would be: | Very economically inefficient. Consumers would over consume these goods. |
| If the marginal unit of a good will result in more marginal utility than marginal cost, then: | Society will receive a net benefit from producing the marginal unit. It is an efficient use of limited resources to continue producing more units of the good as long as the marginal utility exceeds the marginal cost. |
| If the marginal unit of a good will result in more marginal cost than marginal utility, then: | Society will suffer a net loss from producing the marginal unit. It is inefficient use of limited resources to continue producing more units of the good as long as the marginal cost exceeds the marginal utility. |
| Indifference Curve | A curve showing different combinations of two goods that provide equal total utility to a consumer. |
| Marginal Rate of Substitution | The quantity of one good that a consumer is willing to sacrifice in order to obtain a unit of another good. |
| Budget Constraint | A curve showing the different combinations of two goods that a consumer can purchase with a certain amount of income. |
Created by:
dengler
Popular Business sets