shcards Set

Along an Indifference Curve

A graphical representation showing combinations of goods that provide a consumer with the same level of satisfaction.

Areas of Economics

The main categories of economic study, including microeconomics and macroeconomics.

Assumption About Consumers

The premise that consumers act rationally to maximize their utility.

Budget Line

A graphical representation of all possible combinations of goods that can be purchased with a given income.

Budget Lines

Lines that represent various combinations of two goods that a consumer can afford given their income and the prices of the goods.

Cardinal Utility

A concept that quantifies utility, allowing the comparison of satisfaction levels across different goods.

Ceteris Paribus

A Latin phrase meaning 'all other things being equal,' used in economics to isolate the effect of one variable.

Changes in Demand

Factors that cause the demand curve to shift, resulting in a new demand relationship at every price level.

Consumption

The use of goods and services by households.

Cross-Price Elasticity of Demand

A measure of how the quantity demanded of one good changes in response to a change in the price of another good.

Contractionary Monetary Policy

A type of policy used to reduce the money supply to control inflation.

Contractionary Fiscal Policy

A policy aimed at reducing government spending or increasing taxes to lower aggregate demand.

Demand Curve

A graph that shows the relationship between the price of a good and the quantity demanded.

Demand Curve Slope

Indicates the direction of the relationship between price and quantity demanded, typically downward sloping.

Engel Curve

A curve that represents the relationship between income level and the quantity of a good consumed.

Expansionary Fiscal Policy

A policy aimed at increasing government spending or decreasing taxes to boost aggregate demand.

Expansionary Monetary Policy

A policy used to increase the money supply to stimulate economic growth.

Expenditure Approach

A method of calculating GDP that totals consumer, investment, government, and net export expenditures.

GDP Vs GNP

GDP measures the value of all goods and services produced within a country's borders, while GNP measures the value of goods and services produced by the residents of a country, regardless of location.

Households and Businesses

The two main sectors in an economy that interact through consumption and production.

Income Approach

A method for calculating GDP that sums all incomes earned in the production of goods and services.

Indifference (A.K.A. Utility) Curves

Curves that represent combinations of goods that provide equal satisfaction to consumers.

Indifference Curve

A curve that represents different combinations of two goods that give the consumer equal satisfaction and utility.

Indifference Curve and Budget Line

The point where the budget line is tangent to the indifference curve indicates the optimal consumption bundle.

Indifference Curve Properties

Properties include downward sloping nature, being convex to the origin, and never crossing.

Law of Demand

A principle stating that, all else equal, as the price of a good decreases, the quantity demanded increases.

Law of Diminishing Marginal Utility

The principle that as a person consumes more of a product, the additional satisfaction gained from consuming each additional unit decreases.

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of utility.

Movement Along the Demand Curve

Changes in quantity demanded resulting from price changes for the good itself.

Normal Goods Vs Inferior Goods

Normal goods are those whose demand increases as income increases, whereas inferior goods see demand decrease as income increases.

Normative Economics

Branch of economics that involves value judgments and opinions about economic fairness.

Number of Farms in Louisiana

Statistical data that can impact agricultural supply and demand in that state.

Opportunity Costs

The value of the next best alternative foregone when a choice is made.

Ordinal Utility

A concept that ranks preferences but does not measure the utility difference between them.

Perfect Complements

Goods that are consumed together in fixed proportions.

Perfect Substitutes

Goods that can be used in place of each other without loss of satisfaction.

Population Increases Impact on The Demand Curve

An increase in population typically shifts the demand curve to the right, indicating an increase in overall demand.

Positive Economics

The branch of economics that deals with objective analysis and the facts of economic phenomena.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in price.

Scarcity

The condition in which resources are limited and cannot meet all human wants.

Shift in Demand Curve

An event that causes the entire demand curve to shift left or right, indicating a change in demand at every price level.

U.S. GDP

The total market value of all final goods and services produced in the United States during a specified period.

U.S. GNP

The total value of all final goods and services produced by residents of the United States, regardless of where they are produced.

Where the Indifference Curve and Budget Line Are Tangent

This point indicates the optimal consumption choice for the consumer, maximizing utility within budget constraints.