Chapter 22 - Theory of Consumer Choice

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ECON 1101 Midterm II

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5 Terms

1
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budget constraint

possible bundles of different goods one can buy given one’s income and the prices of goods

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budget constraint slope (BC slope)

relative price of the goods

3
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indifference curve

various bundles of goods that make the consumer equally happy

4
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indifference curve slope (IC slope)

marginal rate of substitution

5
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marginal rate of substitution

rate at which the consumer is willing to trade one good for the other