Microeconomics midterm Vocab LSE || with 100% Verified Solutions.
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Microeconomics Vocab LSE || with 100% Veri
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Microeconomics Vocab LSE || With 100% Veri
Partial equilibrium correct answers analysis of a single market
general equilibrium correct answers analysis of the interrelation between all markets in an economy
axiom of comparison correct answers every consumer can compare consumption bundles a and b and rank them
axiom fo transitivity...
Microeconomics midterm Vocab LSE || with 100% Verified Solutions.
Partial equilibrium correct answers analysis of a single market
general equilibrium correct answers analysis of the interrelation between all markets in an economy
axiom of comparison correct answers every consumer can compare consumption bundles a and b
and rank them
axiom fo transitivity correct answers if a is preferred to be and b is preferred to c ten a must be preferred to c
goods correct answers commodities for which more is preferred to less
bad correct answers commodities for which less is preferred to more
neuters correct answers commodities for which the consumer is indifferent between more or less
Cardinal utility correct answers idea that economic welfare can be directly observable
Marginal Utility correct answers the change in utility due to an infinitesimally small change in the quantity of x consumed, magnitudes of utility differences can be compared (additional satisfaction a consumer gains from consuming one more unit of a good or service)
ordinal utility correct answers satisfies the two preference axioms, allows a consistent ranking of choices, but does not require comparing absolute magnitudes of utility differences
Marginal Rate of Substitution (MRSc) correct answers amount of y the consumer willingly gives
up for additional unit of x keeping total utility constant (slope of the indifference curve)
MRSe correct answers the rate at which you can trade one good for the other on the market, slope of the budget line, has to give up x or y in the market holding relative prices constant
consumer optimum correct answers the point on budget line that reaches the highest possible indifference curve
interior solution correct answers both commodities consumed in positive quanities
corner solution correct answers one commodity not consumed at all
if MRSc and MRSe does not equal you get? correct answers corner solution Complements correct answers commodity pairs that are consumed jointly perhaps in fixed proportions, not sensitive to price ex ketchup and hotdogs, or hotdogs and hotdog buns
substitutes correct answers commodity pairs where one commodity is consumed to the exclusion of the other, sensitive to price ex margarine and butter, tap water and bottle water
Income Expansion Path correct answers the points representing consumers optimal consumption bundles of x and y at given prices when income increases with preferences fixed, slope will remain the same (the increase in income the consumption increases)
normal good correct answers when income increases consumption of good increases
inferior good correct answers when income increases consumption of good decreases
Engel curve correct answers the locus of desired consumption levels for a commodity at fixed relative prices with income varying, normal goods positive slope, inferior goods, negative slope, just looking at x
budget lines correct answers - cross when one price is higher than the other
- meet at a point when there is a fixed price but one price increases
- shift to the right of income increases
income elasticity of demand correct answers the percentage change in the quantity of a good demanded that results from a 1 percent change in income, normal goods have positive income elasticity, inferior goods have negative income elasticity
elasticity correct answers is a number we use to find demand curve and the sensitivity of consumer, measures responsiveness of demand, elastic sensitive to price change, inelastic not sensitive to price change
Price expansion path correct answers for x is the locus of points representing optimal consumption bundles of x and y for a given level of income as the price of x varies, if normal good point will go up, if inferior good point will go down, if there is an increase in income the line shifts to the right
individual demand curve correct answers for x can be derived fro the corresponding price expansion path, as px falls consumer moves to higher and higher indifference curves, if rise in income line shifts to the right
choke price correct answers might be a price to which price of x is so high that consumers by y and it is a corner solution
price elasticity of demand correct answers the percentage change in the quantity of a good demanded that results from a 1 percent change in its price
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