Chapter 5 - Demand
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14 Terms
1
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Consumer surplus
________: difference between a buyers reservation price for a product and the price actually paid.
2
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Horizontal addition
________: process of adding individual demand curves to get the market demand curve.
3
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Law of demand
people do less of what they want to do as the cost of doing it rises
4
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Marginal utility
additional utility gained from consuming an additional unit of a good
5
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Law of diminishing marginal utility
tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point
6
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Rational spending rule
spending should be allocated across goods so that the marginal utility per dollar is the same for each good
7
New cards
Horizontal addition
process of adding individual demand curves to get the market demand curve
8
New cards
Consumer surplus
difference between a buyers reservation price for a product and the price actually paid
9
New cards
Law of demand
People do less of what they want to do as the cost of doing it rises
10
New cards
Marginal utility
Additional utility gained from consuming an additional unit of a good
11
New cards
Law of diminishing marginal utility
Tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point
12
New cards
Rational spending rule
Spending should be allocated across goods so that the marginal utility is per dollar is the same for each good
13
New cards
Horizontal addition
Process of adding individual demand curves to get the market demand curve
14
New cards
Consumer surplus
Difference between a buyer's reservation price for a product and the price actually paid
Flashcards (27)