Utilitarianism

what is wealth

the market value of a persons assets at any given moment

what is market value

how much people are willing to pay for something

what does income measure

the change in wealth over time

what is the feasible set

how much of different types of goods people could buy

what is a bundle

a combination of 2 or more goods

what does budget constraint mean

the constrain of choices by someones budget

what is utilitarianism

an approach that puts human happiness as central to life

what is the value theory, and specifically what is it for economists

what matters, for microeconomists it’s individual happiness

what is a theory of right action

what people should do. If value theory is happiness, theory of right action is the act to maximise individual happiness

what is the pareto criterion

if the change will impose harm on anybody, then the change cannot be imposed on anyone

what is constrained optimisation

how people act to maximise happiness when faced with a limited amount of resources

what does the slope on the budget line represent

price of good on x axis/price of good on y axis

how does a change in income affect the budget line

it shifts

how does a change in one of the prices affect the budget line

it pivots