day 5 part 1 Economics: Demand and Marginal Benefit

These flashcards cover introductory concepts of the demand model, including the Diamond-Water paradox, salaries, and the concept of diminishing marginal benefit.

Entry-level teacher salary

The average starting salary for teachers in America, which is approximately $38,600$ a year.

Entry-level financial analyst salary

The average starting salary for financial analysts in America, specifically $74,101$ a year on average.

Diamond-Water Paradox

The observation that water, which is essential for life, is very cheap (below $\text{\$1.50}$ on average), while diamonds, which are non-essential, can cost millions of dollars.

Marginal Benefit ($MB$)

The additional benefit or "expected additional benefit" a consumer receives from consuming one more unit of a good.

Diminishing Marginal Benefit

The economic principle stating that each additional unit of a good consumed provides less benefit or satisfaction to the consumer than the previous unit; this concept drives the downward slope of the demand curve.

Demand Schedule

A formal list that spells out the specific quantities a buyer demands at each corresponding price.

Economizing behavior (Optimization)

A process where a consumer ensures their marginal benefit from a good is at least as high as the expected additional cost, meaning the maximum they are willing to pay equals their marginal benefit.

Height of the demand curve

The vertical distance on a graph that measures the buyer's marginal benefit ($MB$) at a specific quantity.

Parallel shift of the demand curve

The result on a graph when marginal benefit increases by a fixed amount (such as $\$2$) for every quantity, causing a uniform vertical movement of the entire curve.