Ch 4 Utility Flashcards
1
Q
Utility function
A
Assigning numbers to every possible consumption bundle in order that more preferred bundles get higher numbers
2
Q
Ordinal utility
A
Order of consumption bundles is what matters, not the numbers themselves or the size of the difference
3
Q
Utility
A
A way to describe consumer preferences
4
Q
Monotonic transformation
A
Transforms one set of numbers into another set while preserving the set of numbers
5
Q
Cardinal utility
A
Attaches significance to the magnitude of utility
6
Q
Quasilinear utility
A
Partly linear utility, each indifference curve is a vertically shifted version of a single indifference curve
7
Q
Cobb-Douglas utility function
A
Hyperbolic, asymptote to both axes
8
Q
Marginal utility
A
Utility change at the margins of amount for a single good
