Ch 5 Choice Flashcards
1
Q
Optimal choice
A
Where the indifference curve is tangent to the budget line
2
Q
Boundary optimum
A
Optimal consumption involves not consuming any of one good
3
Q
Demanded bundle
A
Optimal choice of goods 1 and 2 at one set of prices and income
4
Q
Demand function
A
Relates the optimal choice to different values of prices and incomes
5
Q
Optimal choice with perfect substitutes
A
Usually on the boundary
6
Q
Optimal choice with perfect complements
A
Quantities demanded will always be on the diagonal, since the optimal choice occurs when the 2 goods are consumed in equal amounts
7
Q
Optimal choice with concave preferences
A
Boundary point, at the highest indifference curve
