Principles of Consumer Utility and Preferences

<p>A curve showing consumption bundles that give the consumer the same level of satisfaction</p> Signup and view all the answers

<p>Higher indifference curves are preferred to lower ones</p> Signup and view all the answers

<p>Each additional unit adds less to utility than the previous unit</p> Signup and view all the answers

<p>What consumers want and prioritize among different options</p> Signup and view all the answers

<p>A consumer’s preference among consumption bundles that give the same level of satisfaction</p> Signup and view all the answers

<p>As one good increases, the other decreases to maintain constant satisfaction level</p> Signup and view all the answers

<p>It contradicts the principle that higher indifference curves are preferred to lower ones</p> Signup and view all the answers

<p>Combinations of goods and services available for purchase by consumers</p> Signup and view all the answers

<p>Property 4: Indifference curves are bowed inward (convex to origin)</p> Signup and view all the answers

<p>The rate at which a consumer is willing to trade one good for another</p> Signup and view all the answers

<p>At the point where the highest indifference curve and the budget constraint are tangent</p> Signup and view all the answers

<p>MUA/PA= MUB/PB= …. = MUZ/PZ (subject to budget constraints) for all goods</p> Signup and view all the answers

<p>Causes it to shift to the right (and vice versa)</p> Signup and view all the answers

<p>The consumer's valuation of goods equals the market's valuation at their optimum</p> Signup and view all the answers

<p>People are more willing to trade away goods that they have in abundance and less willing to trade away goods of which they have little</p> Signup and view all the answers

<p>Consumption bundles that give the consumer the same level of satisfaction</p> Signup and view all the answers

<p>The change in utility from consuming one additional unit of a good</p> Signup and view all the answers

<p>Marginal utility diminishes over time</p> Signup and view all the answers

<p>People are willing to trade away goods to reach higher indifference curves</p> Signup and view all the answers

<p>The rate at which the consumer is willing to substitute one good for another while maintaining the same level of satisfaction</p> Signup and view all the answers

<p>'Consumption bundles' refer to different combinations of goods and services that a consumer can afford with their income</p> Signup and view all the answers

<p>Each additional unit of a good adds less to utility than the previous unit</p> Signup and view all the answers

<p>Consumer optimum occurs when the highest possible indifference curve is tangent to the budget constraint.</p> Signup and view all the answers

<p>A change in income shifts or pivots the budget constraint parallelly.</p> Signup and view all the answers

<p>It lies on the highest possible indifference curve and within budget constraints.</p> Signup and view all the answers

<p>They signify that as more of one good is consumed, less of another good must be consumed to maintain constant satisfaction.</p> Signup and view all the answers

<p>Consumption bundles that give the consumer the same level of satisfaction</p> Signup and view all the answers

<p>Consumers prefer more of a good to less</p> Signup and view all the answers

<p>Each additional unit adds less to utility than the previous unit</p> Signup and view all the answers

<p>The marginal rate of substitution</p> Signup and view all the answers

<p>MUA/PA = MUB/PB = ... = MUZ/PZ (subject to budget constraints) for all goods</p> Signup and view all the answers

<p>Shifts the budget constraint</p> Signup and view all the answers

<p>Each additional unit adds less and less extra satisfaction</p> Signup and view all the answers

<p>The consumer's optimal choice is reached</p> Signup and view all the answers

<p>'Consumption bundles' refers to different combinations of goods and services that a consumer can afford given their income and prices of goods.</p> Signup and view all the answers

<p>It indicates that both combinations are equally preferred by consumers.</p> Signup and view all the answers

<p>Indifference curves are downward sloping.</p> Signup and view all the answers

<p>Property 1: higher indifference curves are preferred to lower ones.</p> Signup and view all the answers

<p>At the point where the highest indifference curve and the budget constraint are tangent.</p> Signup and view all the answers

<p>Indifference curves are bowed inward (convex to origin).</p> Signup and view all the answers

<p>Diminishing marginal utility</p> Signup and view all the answers

<p>Consumer preference among consumption bundles</p> Signup and view all the answers

<p>Higher indifference curves are preferred to lower ones</p> Signup and view all the answers

<p>The marginal rate of substitution</p> Signup and view all the answers

<p>More willing to trade away goods they have in abundance</p> Signup and view all the answers

<p>Consumers usually prefer more of something to less of it</p> Signup and view all the answers

<p>Shifts the budget constraint</p> Signup and view all the answers

<p>Consumer preferences for combinations of goods</p> Signup and view all the answers

<p>At the point where the highest indifference curve and the budget constraint are tangent</p> Signup and view all the answers

<p>Combinations of goods that provide a certain level of satisfaction</p> Signup and view all the answers

<p>MUA/PA = MUB/PB = ... = MUZ/PZ (subject to budget constraints) for all goods</p> Signup and view all the answers

<p>The consumer's optimal choice is achieved</p> Signup and view all the answers

<p>Each additional unit provides less extra satisfaction than the previous one</p> Signup and view all the answers

<p>They are negatively sloped</p> Signup and view all the answers

<p>The marginal rate of substitution</p> Signup and view all the answers

<p>Higher indifference curves are preferred to lower ones</p> Signup and view all the answers

<p>The consumer's optimal choice is reached</p> Signup and view all the answers

<p>Indifference curves are downward sloping</p> Signup and view all the answers

<p>At the point where the highest indifference curve and budget constraint are tangent</p> Signup and view all the answers

<p>Each additional unit provides less extra satisfaction than the previous one</p> Signup and view all the answers

<p>Indifference curves are bowed inward (convex to origin)</p> Signup and view all the answers

<p>Shifts it parallel to itself</p> Signup and view all the answers

<p>Different combinations of goods that a consumer can afford given income and prices</p> Signup and view all the answers

<p>It decreases as more of a good is consumed</p> Signup and view all the answers